Taxation of Chargeable Gains Act 1992 section 210

Life assurance and deferred annuities

Section 210 deals with the capital gains tax treatment of life insurance policies and deferred annuity contracts, providing an exemption from CGT for most gains arising on these instruments unless they have been acquired second-hand for actual consideration.

• Gains on life insurance policies and deferred annuity contracts are generally exempt from CGT, unless the rights have at any time been acquired by someone for actual consideration (premiums paid under the policy do not count as actual consideration)
• Transfers between spouses, civil partners, former spouses or civil partners (in approved post-marriage or post-civil partnership disposals), and intra-group company transfers are disregarded when determining whether actual consideration has been given
• Where a disposal of policy rights gives rise to a loss, the allowable loss is restricted to the amount that would arise if the income tax adjustment rules in sections 37 and 39 were ignored, preventing artificial inflation of capital losses
• Specific events count as disposals for CGT purposes: for life policies, these are receipt of the sum assured, transfer of assets under the policy, or surrender; for deferred annuities, these are receipt of the first annuity instalment or surrender of the contract