Chargeable events on life assurance bonds

KEY POINTS

• The case of Joost Lobler showed deficiencies in the chargeable event legislation.
• HMRC’s consultation made three proposals for change but none were accepted.
• Basic calculation rules remain unchanged but taxpayers can ask HMRC to recalculate the gain on a ‘just and reasonable’ basis.
• Could new rules have allowed a loss on surrender to be set against a previous chargeable event gain?
• The uncertainty in the proposed rule changes seems unsatisfactory.

The taxation rules for the encashment of life assurance bonds (both UK and offshore) have caused considerable controversy in recent years particularly on partial encashments. The government has decided not to proceed with any of the options proposed in the 2016 consultation but instead in Finance Bill 2017 it will make a relatively minor...