The chargeable event regime is founded on a ‘realisation’ basis, and consequently is applicable when policy benefits become receivable, or when the value of a policy is realised on sale. In certain circumstances, when a loan is made in connection with a life assurance policy it is treated as a partial surrender and so a chargeable event - see IPTM3545. Events are defined in detail at ITTOIA05/S484 as follows.
A chargeable event is
The different types of event are explained at
An assignment not for value (or ‘money or money’s worth’), for instance an assignment by way of gift, is not a chargeable event.
Certain exceptions are set out at IPTM3410, notably in relation to qualifying policies.
‘Income payments’ under a guaranteed income bond are treated as part surrenders of rights, unless the payment is the final benefit paid under the contract in which case it is treated as arising from a full surrender. IPTM1420 explains the concept of a guaranteed income bond, and IPTM3550 the types of payments regarded as ‘income payments’.
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