Income Tax (Trading and Other Income) Act 2005 section 511

Method for making transaction-related calculations under section 510

Section 511 sets out the method for calculating whether a relevant transaction (such as a part surrender or assignment of a life insurance policy or contract) has produced a chargeable gain, and if so, how much that gain is.

• A gain arises on a relevant transaction during an insurance year if the transaction value (the value of the part of or share in the rights surrendered or assigned) exceeds the available premium left for that transaction
• The amount of the gain equals the excess of the transaction value over the available premium left
• The transaction value is determined at the time of surrender or assignment, using the valuation method set out in section 508
• In the final insurance year of a policy or contract, the transaction value may be reduced under section 513(4), which can affect whether a gain arises and its amount