CG69051 - Life insurance policies/deferred annuities: exemption for second hand policies: disposals from 9 April 2003: exclusions from the exemption: actual consideration

For the purposes of TCGA92/S210, in relation to disposals on or after 9 April 2003, ‘actual considerationâ€� is, with two exceptions, any consideration other than consideration that is deemed to be given for the purposes of Capital Gains Tax. »Ê¹ÚÌåÓýapp two exceptions are as follows.

Firstly, the amounts paid under the terms of a life insurance policy by way of premiums, or under the terms of a deferred annuity contract (whether as premiums or a lump sum), do not count as ‘actual consideration� - TCGA92/S210 (4).

Secondly, TCGA92/S210 (5) provides that in three circumstances any consideration given on a transfer of the rights conferred by a policy, or an interest in those rights, does not count as ‘actual considerationâ€�. »Ê¹ÚÌåÓýapp circumstances are as follows:

  • If the consideration is given on a transfer between companies such that TCGA92/S171 (1) applies, so that there is no gain or loss on the disposal (see CG45305+);
  • If the consideration is given by one spouse to to another, or by one civil partner to another, whether or not TCGA92/S58 (1) (see CG22000) applies;
  • If the consideration is given on a disposal that is an ‘approved post-marriage disposalâ€� or an ‘approved post-civil partnership disposalâ€�.

TCGA92/S210 (6) sets out the circumstances in which a disposal is an ‘approved post-marriage disposalâ€� or an ‘approved post-civil partnership disposalâ€�. »Ê¹ÚÌåÓýapp disposal must be made by an individual to their former spouse or civil partner in consequence of the dissolution or annulment of a marriage or civil partnership and duly authorised by an appropriate court, or similar body. »Ê¹ÚÌåÓýapp rights or interest transferred must have been held by the person making the disposal immediately before the marriage or civil partnership was dissolved or annulled. So if a life insurance policy is taken out after the marriage or civil partnership has ended and this is subsequently transferred as part of a consequential settlement any actual consideration given is not disregarded.

As regards the treatment of a policy assigned in pursuance of a pension scheme, see CG67691.