IPTM9100 - Overseas insurers: reporting duties of a tax representative: chargeable event certificates for policyholders

The tax representative of an overseas insurer is required to report chargeable events and gains on ‘relevant insurances’ - see IPTM9030 - to policyholders and HMRC in accordance with the rules in ICTA88/S552.

Guidance on completing certificates for policyholders

The information that must be reported to policyholders and the circumstances in which it must be supplied are the same as for UK insurers. The guidance in IPTM7105 to IPTM7140 also applies tothe duties of tax representatives, with ‘insurer’ read as ‘tax representative’ throughout`.

IPTM7105 to IPTM7115 cover the person and address to which certificates should be sent and IPTM7140 gives the time limits for doing so. IPTM7120 to IPTM7135 give the information to be provided on certificates. IPTM7205 and IPTM7210 cover corrections and errors in certificates.

IPTM7300 to IPTM7405 give guidance on the types of chargeable events that can arise. IPTM7500 onwards covers calculation of gains and IPTM7700 onwards covers the personal portfolio bond rules. IPTM9220 gives guidance where a policy is not denominated in sterling.

The following three aspects relate only to policies from overseas insurers.

Whether income tax is treated as paid on a gain from the policy

The tax representative is required to report whether income tax would be treated as paid on the assumption that the liable person is an individual, and if so the amount of the tax.

In practice however, where the policy is from an overseas insurer it will almost always be the case that no income tax is treated as paid on the gain. The main exception is where a capital redemption policy was issued before 23 February 1984, or a life insurance policy or contract was taken out before 18 November 1983 and has not been varied since then to increase the benefits secured or extend the term. Income tax is treated as paid on gains from such policies and this should be reported on the chargeable event certificate.

Apportionment of gains for periods of non-residence

Where the holder of a policy from an overseas insurer was not resident in the UK for part of the policy period, the taxable gain is reduced by a proportion relating to the time that the policyholder was non UK-resident - see IPTM3730.

However, a tax representative must report the full amount of the gain on the chargeable event certificate. A tax representative is unlikely to hold the information that would enable it to apportion the gain and should not attempt to do so. The self-assessment tax return guidance tells a policyholder how to apportion the full gain shown on the certificate if necessary.

Number of years for top-slicing relief purposes

A tax representative is required to calculate and report the full number of years for top slicing relief, as explained in IPTM7560. Where a policyholder was not resident in the UK for part of the policy period, the number of years is reduced to reflect this - see IPTM3830 . However the tax representative must not report the reduced number even if it has the information to calculate it. The self-assessment tax return guidance also tells a policyholder how to work out this reduced number.