Section 204 | Policies of insurance and non-deferred annuities ^F1

(1)A gain accruing on a disposal of, or of an interest in, the rights conferred by a non-life policy of insurance is not a chargeable gain (but see subsection (2)).^F1

(2)If a disposal is of, or of an interest in, the rights conferred by a non-life policy of insurance of the risk of—^F1

(a)any kind of damage to assets, or^F1

(b)the loss or depreciation of assets,^F1

the exemption under subsection (1) does not apply so far as those rights relate to chargeable assets.

(3)For this purpose “chargeable assets” means assets on the disposal of which a chargeable gain—^F1

(a)may accrue, or^F1

(b)might have accrued.^F1

(4)Nothing in subsections (1) and (2) prevents sums received under a non-life policy of insurance of the risk of—^F1

(a)any kind of damage to assets, or^F1

(b)the loss or depreciation of assets,^F1

from being sums derived from the assets for the purposes of this Act (and, in particular, for the purposes of section 22).

(5)A gain accruing on a disposal of, or of an interest in, the rights conferred by a contract for an annuity is not a chargeable gain if the annuity is—^F1

(a)a non-deferred annuity, or^F1

(b)an annuity granted (or deemed to be granted) under the Government Annuities Act 1929.^F1

(6)If any investments or other assets are, in accordance with a policy issued in the course of life assurance business carried on by an insurance company, transferred to the policy holder—^F1

(a)the policy holder's acquisition of the assets, and^F1

(b)the disposal of the assets to the policy holder,^F1

are to be taken for the purposes of this Act to be for a consideration equal to the market value of the assets.

(7)In this section “interest”, in relation to any rights, means an interest as a co-owner of the rights.^F1

(8)It does not matter—^F1

(a)whether the rights are owned jointly or in common, or^F1

(b)whether or not the interests of the co-owners are equal.^F1

(9)In this section a “non-deferred annuity” means an annuity—^F1

(a)which is not granted under a contract for a deferred annuity, and^F1

(b)which is granted in the ordinary course of a business of granting annuities on the life of any person,^F1

and it does not matter whether the annuity includes instalments of capital.

(10)In this section a “non-life policy of insurance” means—^F1

(a)a contract made in the course of a capital redemption business, within the meaning of section 56(3) of the Finance Act 2012, and^F1F2F3

(b)any ... policy of insurance which is not a policy of insurance on the life of any person.^F1F4