Insurance bond - loss incurred on full surrender = allowable under TCGA92?

[rr296]

How should the full surrender of an offshore life insurance policy (i.e. an insurance bond) at a loss be treated by an individual tax payer? to note, the surrender was done by the original policy holder. There had been no prior chargeable events on that policy earlier, so no deficiency relief is applicable.

Calculation of chargeable event gains indicates the policy stood at a significant loss when surrendered. Chargeable Events legislation in ITTOIA 2005 Chapter 9 does not appear to address losses, therefore I presume those remain within the remit of capital gains legislation as the exclusion under TCGA 1992 Section 37 ("There shall be excluded from the consideration for a disposal of assets taken into account in the computation of the gain any money or money’s worth charged to income tax as income...") does not apply.

Is the loss incurred on surrender therefore an allowable capital loss? or are there special rules for this?

I do not immediately see any special rule but HMRC helpsheet 320 for Gains on UK life insurance policies states "The result of the calculation when a chargeable event arises may not be a positive amount. If so, you haven’t made a gain and shouldn’t therefore make any entries on your tax return. If the result of a full surrender, death or maturity calculation is negative and you made no gains on the policy in earlier years, you’ve made a loss on the policy. There’s no relief for that loss and you shouldn’t make any entries on your tax return."

I am curious on what basis they come to this conclusion as I do not immediately see any examples of policies surrendered at a loss in IPTM

[pawncob]

If an event is chargeable, the gain is taxable (subject to calculation, exemptions etc)
No relief for losses is available.(except against gains realised)

[maths]

The only relief available is deficiency relief (which you say doesn't apply in your case).

No other form of relief for losses is provided for under the legislation which specifically governs non-qualifying life policies [ITTOIA 2005 Part 4 Chapter 9].