IPTM9040 | Overseas insurers: relevant insurances: residence of policyholders

One of the criteria for a policy or contract to be a ‘relevant insurance’ is that the policyholder is resident in the UK. It will normally be obvious whether a policyholder is resident in the UK but the residence status may be unclear in some cases and if so, it will depend on the particular circumstances.

Determining residence from information in the insurer’s possession

An insurer is not required to take active steps to establish whether an individual policyholder is resident in the UK - that is a matter for HMRC. The insurer must act according to the residence status that is indicated by the information in its possession. This includes deciding whether a tax representative is required and whether the insurer needs to provide information about a chargeable event on a policy held by a particular policyholder.

An insurer does not need to ask policyholders for information that it does not need for business reasons or take active steps to determine where policyholders are resident. However, if any administrative unit of the insurer receives information that is relevant to a policyholder’s residence status, particularly if it suggests current UK residence, then the insurer must treat that information as being in its possession and act upon it. This means that an insurer should have systems in place to ensure that relevant information is passed to the unit responsible for compliance with the reporting rules.

Information relevant to a policyholder’s residence

If the insurer has a live correspondence address for the policyholder then it should treat the policyholder as resident in the country in which the address falls, unless it has other information indicating that the policyholder is actually resident in another country. If the insurer has reason to believe that the address is not where the policyholder lives, but has no information about the policyholder’s place of residence, then there is no requirement for the insurer to establish the place of residence unless it chooses to do so for its own purposes.

The strongest evidence an overseas insurer will have about residence is what the policyholder tells the insurer. However, there may be circumstances in which the insurer has no information about where a policyholder lives at the time of the event either directly from the policyholder or via an intermediary. In the absence of any contrary evidence, an insurer should assume that the policyholder is resident in the UK if:

• it receives a request to pay the policy benefits to an address in the UK

• it receives a request to pay policy benefits on maturity or surrender directly to a UK bank or building society account, or

• a new policy is sold through a UK-based intermediary and the insurer has not received any notification of an overseas address either at the time of the sale or subsequently.

Policies held on trust

A body of trustees is treated as a single policyholder. There are special rules for determining whether a body of trustees is UK resident- see IPTM9230.