Corporation Tax Act 2009 section 567

Gains on deemed surrenders to be brought into account on related transactions

Section 567 explains how gains arising from a deemed surrender of a life policy or similar contract are brought into account when a related transaction occurs, and how those gains are apportioned if the company retains an interest in the contract.

• Any gain from a deemed surrender of a life policy contract must be recognised as a non-trading credit in the accounting period when a related transaction takes place
• If the company is no longer party to the old contract after the related transaction, the full deemed gain is brought into account
• If the company remains party to the old contract after the related transaction, only a proportionate fraction of the deemed gain is recognised
• The fraction is calculated as the amount received from the related transaction divided by the total amount that would have been payable if all rights under the old contract had been surrendered immediately before the transaction