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HMRC internal manual

Insurance Policyholder Taxation Manual

Overseas insurers: reporting duties: policies not denominated in sterling

Currency in which gains and other information may be reported

Some policies held by UK residents with an overseas insurer may be denominated in acurrency other than sterling. UK resident policyholders have to enter the gains insterling in their tax returns. If chargeable event certificates are not expressed insterling the method of currency translation to be used is described below.

Reporting thresholds

In many cases the tax representative or insurer will need to calculate the chargeableevent gain or policy proceeds in sterling to check whether it needs to report the event toHMRC because the reporting thresholds are linked to the basic rate limit which isdenominated in sterling. Currency conversion should be at the rate applying on the date ofthe event.

In particular, a tax representative or an insurer carrying outthe duties of a tax representative is only required to provide chargeable eventcertificates to HMRC, on events other than whole assignments, if the gain is more thanhalf the ‘basic rate limit’ - see IPTM9160.

Where the overseas insurer has given undertakings releasing it from therequirement to appoint a tax representative - see IPTM9140

  • if the policy or contract was made on or after 6 April 2000 then the insurer is only required to provide chargeable event certificates to HMRC on events where the gain in sterling is more than half the ‘basic rate limit’ - IPTM9160
  • if the policy or contract was made before 6 April 2000, the insurer needs only to report information about certain events where the policy proceeds in sterling exceed twice the basic rate limit - see IPTM9180.

Calculation of gains and other amounts for policies in foreign currencies

Where a tax representative or insurer reports a gain in sterling, it should compute thegain by calculating the amount of the chargeable event gain in the currency in which thepolicy is denominated and then convert it into sterling at the conversion rate on the dateof the event. This method ensures that currency fluctuations during the life of the policyare disregarded.

Where a tax representative or insurer reports other amounts in sterling, for instance thepremiums paid where there has been an assignment, they should be translated at the rateapplying on the date of the chargeable event.

Further reference and feedback IPTM1013