Second-hand life policy rules tightened

Second-hand life insurance policies will face new rules restricting the scope of capital gains losses under the government's new Budget. The Inland Revenue says in its Budget Note 30 that capital losses incurred when second-hand policies are surrendered or mature will be restricted to the amount of "any real economic loss". Also, any capital gains will not escape tax just because the person making the disposal has received the policy as a gift. Policies that are free from capital gains charges will remain tax-free when transferred between husbands and wives, ex-spouses ...