Commentary

C3.1813 CGT treatment of policies of insurance and life assurance

Capital gains tax
Capital gains tax | Commentary

C3.1813 CGT treatment of policies of insurance and life assurance

Capital gains tax | Commentary

C3.1813 CGT treatment of policies of insurance and life assurance

CGT exempt assets—policies of insurance and non-deferred annuities

A gain accruing on the disposal of the rights, or an interest in the rights, conferred by a non-life policy of insurance is not a chargeable gain1. A non-life policy includes a capital redemption policy2. The exemption does not, however, apply in relation to the disposal of rights conferred by a policy of insurance against the risk of damage to, depreciation of, or loss of, assets so far as those rights relate to chargeable assets3.

A gain accruing on a disposal of the rights, or of an interest in the rights, conferred by a non-deferred annuity or an annuity granted (or deemed to be granted) under the Government Annuities Act 1929 is not a chargeable gain4. The exemption applies if the annuity is granted in the ordinary course of a business of granting annuities on human life, irrespective of who carries on the business.

'Interest' in relation to any rights means an interest as a co-owner of the rights5, and it does not matter whether the rights are owned jointly or in common, or whether or not the co-owners' interests are equal6.

The legislation is silent on the rights of the insured under any other kind of insurance policy, such as a policy of insurance against personal accident.

Where a sum is received under a policy of insurance against the risk of damage etc to assets, the amount is treated as a sum derived from the

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