Life policies—an introduction
Produced in partnership with Keith Bruce-Smith and Katrina Hopkins of Harcus Sinclair

The following Pensions practice note produced in partnership with Keith Bruce-Smith and Katrina Hopkins of Harcus Sinclair provides comprehensive and up to date legal information covering:

  • Life policies—an introduction
  • Overview of the types of death in service benefits and their tax treatment
  • The registered group life policy
  • Eligibility conditions
  • Actively at work requirements
  • What benefits are provided?
  • Taxation treatment
  • Relevant life policy
  • UK tax implications of the relevant life policy
  • Establishment of the relevant life policy trust and its tax treatment
  • More...

Life policies—an introduction

FORTHCOMING DEVELOPMENT: The Office of Tax Simplification (OTS) has released a report outlining recommendations to make considerable aspects of the design of inheritance tax (IHT) simpler, more intuitive and easier to operate. One of the recommendations is that the government should consider ensuring that death benefit payments from term life insurance are IHT free on the death of the life assured without the need for them to be written in trust. In relation to pensions, the OTS says that IHT could similarly be simplified by changing the current anomalous position under which some pension policies can be included within an estate for IHT purposes while other comparable pension savings, set up under discretionary trust, are not. The OTS notes that in relation to defined contribution pensions, the main reason discretionary trusts are currently used to provide death benefits is to keep such pension savings outside IHT. For more information, see: OTS Inheritance Tax review: Simplifying the design of the tax, Chapter 6, pp 52–55.

This Practice Note provides an overview of registered group life policies, relevant life policies and excepted group life policies, as well as their tax treatment.

For more detailed information on registered life assurance arrangements generally, see Practice Note: Registered life assurance arrangements.

For information on practical issues specific to relevant life policies or excepted group

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