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HMRC internal manual

Insurance Policyholder Taxation Manual

HM Revenue & Customs
, see all updates

Overseas insurers: reporting duties of a tax representative: chargeable event certificates for policyholders

The tax representative of an overseas insurer is required to report chargeable eventsand gains on ‘relevant insurances’ - see IPTM9030 -to policyholders and HMRC in accordance with the rules in ICTA88/S552.

Guidance on completing certificates for policyholders

The information that must be reported to policyholders and the circumstances in whichit must be supplied are the same as for UK insurers. The guidance in IPTM7105 to IPTM7140 also applies tothe duties of tax representatives, with ‘insurer’ read as ‘taxrepresentative’ throughout`.

IPTM7105 to IPTM7115 cover the person and address to whichcertificates should be sent and IPTM7140 gives the time limitsfor doing so. IPTM7120 to IPTM7135give the information to be provided on certificates. IPTM7205 andIPTM7210 cover corrections and errors in certificates.

IPTM7300 to IPTM7405 give guidanceon the types of chargeable events that can arise. IPTM7500onwards covers calculation of gains and IPTM7700 onwards coversthe personal portfolio bond rules. IPTM9220 gives guidancewhere a policy is not denominated in sterling.

The following three aspects relate only to policies from overseas insurers.

Whether income tax is treated as paid on a gain from the policy

The tax representative is required to report whether income tax would be treated aspaid on the assumption that the liable person is an individual, and if so the amount ofthe tax.

In practice however, where the policy is from an overseas insurer it will almost always bethe case that no income tax is treated as paid on the gain. The main exception is wherethe policy or contract was taken out before 18 November 1983 and has not been varied sincethen to increase the benefits secured or extend the term. Income tax is treated as paid ongains from such policies and this should be reported on the chargeable event certificate.

Apportionment of gains for periods of non-residence

Where the holder of a policy from an overseas insurer was not resident in the UK forpart of the policy period, the taxable gain is reduced by a proportion relating to thetime that the policyholder was non UK-resident - see IPTM3730.

However, a tax representative must report the full amount of the gain onthe chargeable event certificate. A tax representative is unlikely to hold the informationthat would enable it to apportion the gain and should not attempt to do so. The selfassessment tax return guidance tells a policyholder how to apportion the full gain shownon the certificate if necessary.

Number of years for top-slicing relief purposes

A tax representative is required to calculate and report the full number of years fortop-slicing relief, as explained in IPTM7560. Where apolicyholder was not resident in the UK for part of the policy period, the number of yearsis reduced to reflect this - see IPTM3830 - but the taxrepresentative must not report the reduced number, even if it has the information tocalculate it. The self assessment tax return guidance also tells a policyholder how towork out this reduced number.

Further reference and feedback IPTM1013