Income Tax (Trading and Other Income) Act 2005 section 506

Assignments occurring when there is a co-ownership transaction

Section 506 explains how deemed assignments arise when there is a change in the ownership structure of a life insurance policy or similar contract — referred to as a "co-ownership transaction" under section 505.

• When a sole owner brings in co-owners, they are treated as having assigned the portion of their ownership interest that exceeds their share under the new ownership arrangement.
• When there are multiple original owners, any owner who drops out entirely is treated as having assigned their whole share, and any owner whose share reduces is treated as having assigned the excess.
• Where owners hold the policy jointly (rather than as tenants in common), the rules convert this into equal shares so that each person's deemed assignment can be calculated.
• The terms "ownership interest", "old ownership" and "new ownership" take their meanings from section 505(4).