IPTM7385 - Other types of assignments

Assignment to a trust by a settlor or from a trust to a beneficiary

An assignment of a policy or a contract by a settlor into trust, or from a trust to its beneficiary or beneficiaries will not normally be for money or money’s worth and consequently will not be a chargeable event. Insurers may assume that there is no chargeable event unless there is information to suggest that the assignment was for money or money’s worth.

Assignment to a will beneficiary

Similarly, the assignment of a policy or contract from the executors of a will to a beneficiary under the will is unlikely to be for money or money’s worth.

Assignments between a director or other employee and a company

In general, any assignment between a company and an employee is unlikely to be a gift and is likely to be for money or money’s worth. Insurers should assume this is the case unless there is strong evidence to the contrary. There may be personal tax implications, but not under the chargeable event regime, where the policy is assigned to the employee.

Where a company director who is also a shareholder assigns a policy or contract to the company the assignment will almost certainly be for money or money’s worth since the shares held are likely to be worth more after the assignment than before.

Assignments between connected persons other than spouses or civil partners

If there is an assignment of a policy or contract between connected persons within the meaning of ICTA88/S839 other than spouses or civil partners living together then it is a chargeable event if for money or money’s worth.

Where there is a whole assignment for money or money’s worth in these circumstances, the value of the assignment is taken in the chargeable event calculation to be the market value of the policy at the time of the assignment. Insurers do not, however, need to report the value of a whole assignment.