Section 204 — Taxation of Chargeable Gains Act 1992: Policies of insurance and non-deferred annuities

Policies of insurance and non-deferred annuities 204 1 A gain accruing on a disposal of, or of an interest in, the rights conferred by a non-life policy of insurance is not a chargeable gain (but see subsection (2)).

2 If a disposal is of, or of an interest in, the rights conferred by a non-life policy of insurance of the risk of—

a any kind of damage to assets, or b the loss or depreciation of assets, the exemption under subsection (1) does not apply so far as those rights relate to chargeable assets.

3 For this purpose “ chargeable assets ” means assets on the disposal of which a chargeable gain—

a may accrue, or b might have accrued.

4 Nothing in subsections (1) and (2) prevents sums received under a non-life policy of insurance of the risk of—

a any kind of damage to assets, or b the loss or depreciation of assets, from being sums derived from the assets for the purposes of this Act (and, in particular, for the purposes of section 22).

5 A gain accruing on a disposal of, or of an interest in, the rights conferred by a contract for an annuity is not a chargeable gain if the annuity is—

a a non-deferred annuity, or b an annuity granted (or deemed to be granted) under the Government Annuities Act 1929.

6 If any investments or other assets are, in accordance with a policy issued in the course of life assurance business carried on by an insurance company, transferred to the policy holder—

a the policy holder's acquisition of the assets, and b the disposal of the assets to the policy holder, are to be taken for the purposes of this Act to be for a consideration equal to the market value of the assets.

7 In this section “ interest ”, in relation to any rights, means an interest as a co-owner of the rights.

8 It does not matter—

a whether the rights are owned jointly or in common, or b whether or not the interests of the co-owners are equal.

9 In this section a “ non-deferred annuity ” means an annuity—

a which is not granted under a contract for a deferred annuity, and b which is granted in the ordinary course of a business of granting annuities on the life of any person, and it does not matter whether the annuity includes instalments of capital.

10 In this section a “ non-life policy of insurance ” means—

a a contract made in the course of a capital redemption business, within the meaning of section 56(3) of the Finance Act 2012 , and b any ... policy of insurance which is not a policy of insurance on the life of any person.