Capital Acquisitions Tax Consolidation Act 2003 section 41

When interest in assurance policy becomes interest in possession

Section 41 determines when an interest in a life assurance policy or deferred annuity contract is treated as coming into possession for Capital Acquisitions Tax purposes, including where the interest is disposed of before the policy matures.

• An interest in a life assurance policy comes into possession when the policy matures or is surrendered to the insurer for consideration, and to the extent of any payment made by the insurer during the currency of the policy
• From 1 January 2026, if a beneficiary disposes of all or part of their interest in a life policy before it matures or is surrendered, the interest is treated as coming into possession at the time of the disposal, triggering a CAT charge at that point
• Contracts for deferred annuities are treated in the same way, with the contract deemed to mature on the date the first instalment of the annuity becomes due
• The 2026 change closes a loophole where beneficiaries could sell or transfer a gifted or inherited policy to a third party before it came into possession, thereby deferring the CAT charge indefinitely