Taxes Consolidation Act 1997 section 730B

Taxation of policyholders

Section 730B sets out the scope of the gross roll-up regime for taxing life assurance policyholders, under which investment growth accumulates tax-free until a chargeable event occurs.

• The regime applies to life policies (life assurance policies or sinking fund/capital redemption policies) that are new basis business of the assurance company, but does not apply to pension business, general annuity business, or permanent health insurance business.
• Policyholders' funds grow tax-free until the investment is realised or, if applicable, until 8 years after the policy commenced, at which point an exit tax is imposed.
• Where the Courts Service invests funds in a life company, group policies are treated as comprising separate life policies for each beneficiary, with premiums and gains allocated according to beneficial ownership.
• The Courts Service must account for exit tax on a self-assessment basis and file an annual electronic return by 28 February specifying total gains and each beneficiary's share.