CG69042 | Life insurance policies/deferred annuities: how are gains exempted

To achieve the aim described in CG69040 of exempting most, but not all, gains on life insurance policies TCGA92/S210 (2) provides, in broad terms, that

• a gain on a disposal of the rights conferred by a life insurance policy or deferred annuity contract (or an interest in those rights) is not a chargeable gain, unless

• the policy or contract is a ‘second hand’ policy or contract.

See CG69043 regarding what constitutes an ‘interest’ in the rights conferred by a life insurance policy or deferred annuity. For guidance on what counts as a disposal of the rights conferred by a life insurance policy or deferred annuity see CG69044.

The way in which TCGA92/S210 excludes ‘second hand’ policies from the exemption was changed by FA03/S157 for disposals on or after 9 April 2003 - a new TCGA92/S210 completely replaced the original section. Detailed guidance on exactly how the (new) TCGA92/S210 (3) applies so that, for disposals from 9 April 2003 onwards, gains on ‘second hand’ policies are excluded from the exemption and remain chargeable is at CG69050+. Detailed guidance on when the exemption of (old) TCGA92/S210 does not apply to disposals of ‘second hand’ policies before 9 April 2003 is at CG69055.