Transaction-related calculations: example: part surrenders followed by a gift part assignment followed by another part surrender in same year
This example illustrates the position where there are several transactions in the same insurance year. It shows how transaction-related calculations are carried out successively to determine whether a part surrender or assignment event has occurred and if so, what the gain is, who is taxable and who is due the chargeable event certificate. It also illustrates the operation of the reporting limit for providing certificates to HMRC.
Anil takes out a policy on 10 June 2000 with a premium of £100,000.
- On 15 August 2004 he makes a part surrender of £20,000.
- On 13 November 2004 he makes another part surrender of £25,000.
- On 10 February 2005 he assigns the policy by way of gift into joint ownership by him and his wife Sunita.
- They make a part surrender of £10,000 on 6 April 2005.