CG69002 - Insurance: Chargeable Events legislation

Certain regular premium policies held for 10 years or more, called ‘qualifying policies’, do not normally give rise to Chargeable Event Gains whether or not they are still owned by the person who took out the policy. A mortgage endowment policy is a typical example of a qualifying policy. Capital Gains Tax arises most commonly on qualifying policies which have been sold by the original owner and indeed there is a thriving second hand market in so-called TEPS, or ‘traded endowment policies’.

The Chargeable Events legislation will most often apply in connection with what are known as `non-qualifying’ life insurance policies and it will also apply to second hand policies which were qualifying but which for some reason ceased to be qualifying (for instance if the term was altered).

Policies which can give rise to a Chargeable Event Gain are not commonly acquired second hand so in most cases in which the Chargeable Events legislation applies there will not be any chargeable gain or allowable loss for Capital Gains Tax purposes - see CG69040+. For the Capital Gains treatment of second hand life insurance policies which give rise to Chargeable Event Gains see CG69061+.