Register a Whole of Life policy at point of surrender

Does a whole-of-life policy need to be registered when it is surrendered - when the policy is in trust and it has a surrender value? The guidance online suggests yes " if a policy is surrendered and the cash sum is retained in the trust, the trust would be required to register from that point ". But I'm not sure what 'retained' means because Aviva will pay the surrender value immediately and it wouldn't be retained, in my opinion? Thank you

Hi Aron Gunningham,
Please refer to:
HS320 Gains on UK life insurance policies (2023)
Thank you. 

Hi, It's a non-qualifying policy. But I'm sorry i'm not sure how this will help me determine whether the trust that overlays the insurance policy needs to be registered at the point of surrender and closing of the investment. Aviva will close the investment and the insurance and pay back the settlor the remaining surrender sum.

Hi,

Non qualifying policies that mature or are redeemed, are taxable. The policiy provider will give you a chargeable event certificate, which should be declared in a Self Assessment Tax Return for the trust.

Thank you.

Sorry again.... I'm asking whether this situation calls for the Trust to be registered with the Trust Registration Service. This isn't a question about registering for SA to pay tax. The guidance on TRS is that WOL plans with a surrender value need to be registered if the surrender value is being retained in the trust. The trust will not retain the surrender value, it will be returned immediately to the policyholder. It's not clear if and why this situation would need for the trustees to register on TRS.

Hi Aron Gunningham,
You would need to clarify this with theTrust Office on 0300 123 1072.
Thank you.


 

I have a similar query to the above. A whole-of-life assurance policy about to be surrendered, small surrender value (c. £4k). However, I am pretty sure it is a qualifying policy still (unlike the case of the previous poster). I tried calling the Trust Office above but the recorded message says that HMRC can't opine on whether a trust needs to be registered or not! I am taking the view that the surrender value, being paid immediately to the policyholder (with consent of trustees) is not being 'retained in the trust' by any normal standard of the English language. Can anyone in HMRC confirm this? I have to say the guidance is not particularly helpful.

Hi
You should check with the policy provider, who should be able to confim if the policy is a qualifying policy.  If it is, it is not taxable.  If not, they will give you a chargeable event certificate, which you should send a copy to HMRC, so that it can be included in your tax liability calculation.