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HMRC internal manual

Insurance Policyholder Taxation Manual

HM Revenue & Customs
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Full surrender, maturity, death or whole assignment: total benefit value: previous sums, benefits and parts assigned

Previous sums and benefits paid

Total benefit value includes sums and benefits of a capital nature, other than ondisability including critical illness, paid under the policy or contract and all relatedpolicies before the chargeable event. It includes any sums or benefits paid when thepolicyholder was not resident in the UK. These are the equivalent of relevant capitalpayments, which insurers may be familiar with from ICTA88.

Where there is an earlier related policy, the value of that policy must be included as aprevious sum or benefit.

Where a qualifying policy is replaced by another qualifying policy on the change of a lifeassured and no consideration is paid - see IPTM7340 - the valuetransferred into the new policy (the ‘retained replacement policy premium’) isnot included as a previous sum or benefit paid.

Value of parts previously assigned

For whole assignments only, total benefit value also includes the total value of anyprevious part assignments of the policy or contract, but not of any related policies.

Although UK insurers are not required to calculate the gain on whole assignments, they arerequired to report on chargeable event certificates the value of any previous partassignments. This value is defined to be the surrender value of the part of the policy orcontract that has been assigned, on the assumption that it had instead been surrendered.

This includes part assignments not for money or money’s worth made before 6 April2001, which were chargeable events, but not part assignments by way of gift made on orafter that date - these are not chargeable events.

Trivial inducement benefits not exceeding £30

Any benefits such as gifts that are provided by an insurer as an inducement for aperson to enter into a policy or contract are disregarded in total benefit value if thetotal cost to the insurer does not exceed £30. See IPTM3535.

Further reference and feedback IPTM1013