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Are withdrawals from insurance bonds income for IHT purposes? JOHN WOOLLEY has HMRC’s definitive answer
KEY POINTS
- The inheritance tax exemption in IHTA 1984 s 21.
- Are withdrawals from single premium policies income?
- The life policy as a non-income producing investment.
- The tax treatment of chargeable events as income.
- HMRC’s latest view that withdrawals are capital.
There has been quite a lot of recent discussion at tax conferences about the ability of a policyholder to take account of withdrawals from single premium life assurance policies (sometimes called capital investment bonds) as part of their income in determining whether they qualify for the ‘normal expenditure out of income’ exemption for inheritance tax in
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