Taxes Consolidation Act 1997 section 721

Life policies carrying rights not in money

Section 721 provides that where a life assurance company transfers investments or other assets (other than cash) to a policyholder, the transfer is deemed to take place at market value.

• Where assets are transferred from a life assurance company to a policyholder under a policy, both the policyholder's acquisition and the company's disposal are deemed to be at market value.
• This market value rule applies for capital gains tax purposes.
• It also applies for the purposes of computing income under Schedule D Case I or Case IV.
• The effect is that the same market value figure is used by both the company and the policyholder, ensuring consistency on both sides of the transaction.