IPTM3540 - Calculating gains: part surrenders and part assignments: ‘periodic calculations’ and ‘excess events’: general

The following rules apply where

• a part of, or share in, the rights under a policy or contract is surrendered, or
• a part of, or share in, the rights under a policy or contract is assigned for money or money’s worth.

A calculation is made at the end of the ‘insurance year’ - see IPTM3505 - in which the surrender or assignment occurs to determine whether a gain has arisen and, if so, its amount.

These events may variously be described as part surrenders, part withdrawals, or an ‘excess’. The meaning of ‘excess’ is described at IPTM3555. Sometimes the term ‘allowable aggregate’ is encountered which refers to the 5% allowable element rule discussed at IPTM1510 and IPTM3560.

There is a practical explanation of how ‘excess events’ arise, with examples, at IPTM7615 onwards.