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HMRC internal manual

Insurance Policyholder Taxation Manual

HM Revenue & Customs
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Permitted property: investment trust companies

Shares held in an approved investment trust company count as propertythat may be selected by the holder of a policy under its terms without making it a PPB. Inorder to be approved by HMRC, investment trust companies must satisfy the conditions in ICTA88/S842.

Approval of investment trust companies is given annually so it is possible that aninvestment trust company that was previously approved may cease to be approved. Whereshares in such a company have been selected as property determining benefits under thepolicy, the link between the value of the shares and the policy benefits must be broken tokeep the policy outside the definition of a PPB. This should be done as soon as reasonablypossible after the loss of approval.

An agreement between the insurer and the policyholder, even if not in writing, to retainthe link between policy benefits and the value of the shares of the unapprovedinvestment trust company would amount to a variation of the terms of the policy. Thisvariation would allow selection of property that is not in any of the permitted categoriesso the policy would become a PPB.

Further reference and feedback IPTM1013