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HMRC internal manual

Insurance Policyholder Taxation Manual

Overseas insurers: reporting duties: policies held on trust

Trustees hold the policy

Where a policy is held in trust, the trustees would in most cases be the policyholder.A trust is a single continuing body for tax purposes and so the trustees are treated as asingle policyholder.

Where an overseas insurer or tax representative must send a chargeable event certificateor information notice to HMRC, it should enter on the certificate or notice the name andaddress of the trustee that has been designated to receive correspondence. If there is nosuch designated trustee then the insurer should include the names and addresses of all thetrustees.

Where it must send a chargeable event certificate to the policyholder, it should send acertificate to the first named trustee, or to any trustee for which it holds an address.

Whether trustees are UK resident

Insurers and tax representatives are only required to report events on ‘relevantinsurances’ - see IPTM9030. A policy will only be arelevant insurance if the policyholder is resident in the UK so where the policyholdersare trustees it is necessary to know whether the trustees, when regarded as a single body,should be treated as UK resident.

If all or none of the trustees are resident in the UK then the trustees must be treated asUK resident or not as appropriate. But where the residence of the trustees is mixed, someUK resident and some not, the position is less straightforward.

Then the trustees are treated as UK resident if the settlor of the trust was resident orordinarily resident or domiciled in the UK when he or she created the trust or providedfunds for it. This is not necessarily information that an insurer or tax representativewill hold and it is not expected to take steps to obtain it. An insurer should act on thebasis of information in its possession. Where it knows that at least one of the trusteesis UK resident, it should treat the trustees as being UK resident, unless it hasinformation to suggest otherwise, and report events on the policy to the trustees and HMRCwhere required.

Chargeable person

Occasionally trustees will be chargeable to tax on any gains arising on the policy,although it is more likely that settlor of the trust is liable. However, in operating thechargeable event reporting rules an overseas insurer or tax representative does not needto know who the liable person is, since the rules only require that information isprovided about, and to, policyholders. Insurers do not need to establish the identities ofthe beneficiaries or settlors of the trust.

Further reference and feedback IPTM1013