Revenue Note for Guidance
730C Chargeable event
This section sets out the meaning of a “chargeable event”. This is an event on which, subject to certain exemptions, an exit tax can be imposed on a life policy.
(1)(a) For the purposes of this Chapter, “chargeable event” in relation to a life policy means —
- the maturity of the life policy (including where payments are made on death or disability which terminate the life policy),
- the full or part surrender of the rights conferred by the life policy (including where payments are made on death or disability which do not result in the termination of the life policy),
- the whole or part assignment of those rights,
- the ending of each 8-year period (called a “relevant period”) beginning with the inception of the policy, where such ending is not the maturity of the policy or the surrender or assignment of rights conferred by the policy.
(1)(b) Where an assurance company could have elected to opt out of the new basis business regime for all policies and contracts relating to life business commenced on or before 31 December 2000 but didn’t, a chargeable event will be deemed to happen on 31 December 2000 for life policies issued by the company before that date (see section 730A(2)).
Exclusions from chargeable event
(2) A chargeable event does not occur where a life policy is wholly or partly assigned —
- by way of security for a debt due to a financial institution or to a qualifying company, within the meaning of section 110, where the debt was originated by a financial institution and the life policy was assigned as security for that debt to that financial institution,
- between a husband and wife or between civil partners,
- between the spouses concerned by virtue of an order made following the granting of a divorce, or following a judicial separation in the State, or following a similar process in a foreign territory but which is recognised as valid in the State,
- between the civil partners concerned by virtue of an order made following the granting of a decree of dissolution in the State, or following a similar process in a foreign territory but which is recognised as valid in the State.
Benefits arising from life policies on death or disability
(3) Where a life policy gives rise to benefits in respect of death or disability, it is only the investment gain included in those benefits which will be subject to exit tax.
Relevant Date: Finance Act 2021