CG12615 - Exemptions: annuities, certain rights under a deed of covenant, certain debts

TCGA92/S204 (5) and (9)

TCGA92/S237 (a) & TCGA92/S237 (b)

TCGA92/S237(a) provides that no chargeable gain shall accrue to any person on the disposal of a right to, or any part of an annuity or lump sum payable out of a superannuation fund, see CG67650+.

TCGA92/S204 (5) provides that for disposals after 4 December 2005 no chargeable gain shall accrue on a disposal of, or of an interest in, an annuity (except a deferred annuity) which is granted in the ordinary course of a business of granting annuities on the life of any person. (For the treatment of deferred annuities on the life of any person see CG69040+.)

For disposals before 5 December 2005 TCGA92/S237(b) provided similarly that no chargeable gain should accrue to any person on the disposal of a right to, or any part of an annuity (except a deferred annuity) granted by a company as part of its business of granting life annuities.

No chargeable gain accrues on a disposal of, or of an interest in an annuity granted or deemed to be granted under the Government Annuities Act 1929.

TCGA92/S237 (c)

The right to annual payments under a deed of covenant (which are not secured on property) is not a chargeable asset. The exemption is restricted to unilateral binding obligations, entered into without consideration, under which the annual payments are not secured on any property, see Rank Xerox Ltd v Lane 53TC185.

TCGA92/S251 & TCGA92/S252

No chargeable gain accrues on the satisfaction or the disposal of a debt by the original creditor or his or her personal representative or legatee, unless it is

• a 'debt on a security', or
• a debt owned by a bank which is not in sterling (that is, a credit balance on a foreign currency bank account).

See CG53400+ and CG78334+.