The inclusion of connected gains in establishing the total gain
for reporting purposes is an anti-fragmentation rule. It is to
ensure that policyholders who make a number of gains from identical
policies with the same insurer in the same year of assessment do
have their gains reported to the HMRC. This rule only applies to
genuine cluster policies.
A gain is ’connected with’ another gain if
Where there is a partial change of policyholder during the year,
for instance from A and B jointly to A solely, then gains before
and after the change in the same year are not connected. This is
because the policyholders are not identical, although A is a
policyholder before and after the change. The threshold operates
separately for each of the appropriate policyholders during the
year - A and B jointly, B as assignor of his share to A, and A
solely.
See
IPTM7230 for guidance on reporting
chargeable events and gains on policies within a cluster of
identical policies.
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