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HMRC internal manual

Insurance Premium Tax

HM Revenue & Customs
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Overview and the law: how to determine whether there is a contract of insurance: financial instruments

A person enters into contracts (futures, differences and swaps), which are based on changes in the value of underlying indices or commodities. Although there is a similarity to insurance, (because they are used to manage risk) and there is an opportunity of profit, no insurable interest is necessary for the person buying the contract and it is not a contract involving ‘utmost good faith’. These are not contracts of insurance.