The profit is deemed to arise on the happening of a chargeable event, basically when value is received, or deemed to be received, from the policy. As the profit will have arisen over a period of years, a form of ‘top-slicing’ relief is available to mitigate the effects of all the profit being taxed in one year.
The chargeable event regime applies to:
•policies issued in respect of life insurance contracts;
•contracts for life annuities; and
•capital redemption policies,
where they were effected on or after 20 March 1968.