Q&A: tax on gains from life insurance policy

In this week’s Q&A, Croner-i tax adviser David Lawson, explains the tax implications when a personal life insurance policy matures, particularly if beneficiary has spent time abroad

I have a client who has a UK policy maturing for £290,000 on 5 April 2024 with premiums paid of £100,000. My client has been non-UK resident in the 2015-16, 2016-17 and 2017-18 tax year. How should this be treated for tax purposes?

When an insurance contract matures it creates a chargeable event providing it is not excluded. The chargeable event is liable as savings income under sections 461, 473 and 484 Income Tax (Trading and Other Income) Act 2005 (ITTOIA).

All references to tax law in this article relate to ITTOIA unless indicated otherwise.

The individual is liable for the income tax if it arises when they are UK resident, and one of three conditions are met under s465.

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