Inheritance Tax Act 1984 section 167

Life policies, etc.

Section 167 sets out special valuation rules for life insurance policies and annuity contracts when calculating inheritance tax, establishing a minimum value based on premiums paid.

• When a life insurance policy or annuity contract is transferred, its value for inheritance tax purposes must be at least equal to the total premiums paid, minus any amounts already received under the policy
• This minimum value rule does not apply on death or where the policy remains in the transferor's estate, and certain term assurance policies with regular level premiums are also excluded
• For unit-linked policies, the minimum value is reduced if the units have fallen in value between the time they were allocated and the date of the transfer
• The minimum value rule also applies to certain chargeable events arising under the settlements regime for trusts without an interest in possession