IPTM7145 | Certificates for HMRC: circumstances where certificates need to be provided: ICTA88/S552(1)(b)

Insurers must also provide information about chargeable events and gains to HMRC, but only where the gain is larger than a certain amount, or where the chargeable event is a whole assignment (ICTA1988/S552(1)(b)). Exceptionally, an officer of HMRC may also specifically require a certificate to be provided to HMRC in other cases (ICTA1988/S552(4)) – see IPTM7155.

Reporting chargeable events other than whole assignments - only required where gain exceeds half the ‘basic rate limit’

Chargeable event certificates must be supplied by the insurer to HMRC where the value of the gain, when aggregated with any connected gains, exceeds half the ‘basic rate limit’. IPTM7150 explains what is meant by connected gains.

The basic rate limit is defined in ITA07/S10(2). It is the amount of taxable income up to which a taxpayer is chargeable at the UK basic rate (not the rate set by any devolved government).

Although insurers are not required to report gains to HMRC which are equal to or less than half the basic rate limit, they may wish as an administrative convenience to send details of all gains to HMRC, perhaps as part of the process that produces certificates for policyholders. There is no objection to this, so long as the information is provided by way of electronic submission meeting the standard specification - see IPTM7160 - and not on paper.

All whole assignments for money or money’s worth must be reported

Insurers must supply details to HMRC in all cases where the chargeable event is a whole assignment for money or money’s worth, whatever the size of the gain.

Information reported to HMRC must include the details of the assignment, but does not have to include calculation of the gain itself, as this may require information the insurer would not have access to. See IPTM7165 and IPTM7505 for further details.

Company policyholders

From the start of the first accounting period of a company to begin on or after 1 April 2008 – ‘the company’s start date’ – policies and contracts owned by the company are no longer within the chargeable event gain rules and are instead taxed under the loan relationships rules – IPTM3900 onwards. As with certificates to the policyholder – IPTM7107 – where the policyholder is a company, the insurer is not required to issue it with a chargeable event certificate unless it has information to suggest that the taxable person is different from the policyholder and is not a company. However, the insurer will not be penalised for continuing to issue certificates after the company’s start date, for instance because the insurer does not know the company’s accounting period or because it is not easy to distinguish on its systems company policyholders from other policyholders