Income Tax (Trading and Other Income) Act 2005 section 509

Chargeable events in certain cases where periodic calculations show gains

Section 509 explains when a gain shown by the periodic calculation under section 507 gives rise to a chargeable event at the end of an insurance year, and identifies three conditions under which it does not.

• Where the section 507 calculation shows a gain at the end of an insurance year, it is treated as a chargeable event at that year end — unless one of three exceptions applies.
• Condition A applies where part of the rights under the policy or contract have been assigned for money or money's worth during that insurance year; Condition B applies where there has been both a part surrender of rights and a later assignment of rights otherwise than for money or money's worth during the same year.
• Condition C applies where the insurance year in question is the final insurance year — meaning no chargeable event can arise from the periodic calculation in the last year of the policy.
• Where Condition A or B (or both) are met, separate transaction-related calculations under section 510 apply instead of the standard periodic gain treatment.