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IPTM3735 | Gains arising to personal representatives and trustees

From HM Revenue & Customs · Insurance Policyholder Taxation Manual

Personal Representatives

When a policyholder dies, the personal representative of the deceased may be liable for tax on a gain.

In determining the liability for tax of the personal representatives, any time apportioned reduction is calculated by reference to any periods that the deceased was not UK resident.

Policies held in a non-charitable trust

If the policy is held in a non-charitable trust, the trustees may be liable for tax on a gain.

In determining the liability for tax of the trustees a time apportioned reduction may be due where:

  • The rights are held by the trustees on non-charitable trusts, and

  • The absent settlor condition is met – the settlor has died

  • The deceased settlor was UK resident when the deceased settlor died

  • The deceased settlor was non-UK resident for a period prior to their death.

If the gain arises during the tax year during which the settlor dies, the deceased individual will be liable to tax on that gain under ITTOIA05/S465. If the gain arises in a subsequent tax year, then the trustees may be liable to tax on the gain.