A charge to corporation tax on life policies, life annuities and
foreign capital redemption policies was introduced by FA89 for
chargeable events in accounting periods beginning after 31 March
1989. Before then, close companies were subject to an
‘apportionment’ charge on chargeable event gains and
other companies were not chargeable. It is imposed by
Chargeable event gains are treated as forming part of the Case 6 of Schedule D income of companies where the policy or contract is made on or after 14 March 1989 or, if made before, is varied on or after that date to increase the benefits or extend its term.
Policies made before 14 March 1989, unless varied in this way, are not subject to any charge under the chargeable event regime. There may be a chargeable capital gain if the exemption under TCGA92/S210 does not apply because the benefit of the contract was acquired by assignment for actual consideration - a second hand policy.
A chargeable event gain will form part of the Case 6 income of a company where the rights conferred by the policy or contract are
All companies are subject to the charge, including charities and housing associations.
A gain arises when a chargeable event occurs and is assessable for the accounting period in which the ‘insurance year’, see IPTM3505, ends. This applies to events including death, surrender or maturity of the policy. Special rules apply to partial withdrawals and assignments, see IPTM3540 and IPTM3570.
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