Relevant life and excepted group life policies—practical issues
Produced in partnership with Kevin Gude of Gowling WLG

The following Pensions practice note produced in partnership with Kevin Gude of Gowling WLG provides comprehensive and up to date legal information covering:

  • Relevant life and excepted group life policies—practical issues
  • The primacy of the policy
  • Discretionary trusts—inheritance tax
  • Use of RLPs and EGLPs as a replacement for life cover in a registered scheme—terminal illness
  • Discretionary trusts—distribution of benefits
  • Who can be a ‘beneficiary’ under an EGLP?
  • What was the issue?
  • How was this issue resolved?
  • Exercising the discretionary power
  • Not a replacement for key-man cover
  • More...

Relevant life and excepted group life policies—practical issues

Statute provides for two tax-efficient alternatives to a life assurance policy held within a registered occupational pension scheme:

  1. the relevant life policy (RLP), and

  2. the excepted group life policy (EGLP)

EGLPs are, in fact, a form of RLP under statute, but as they relate to the provision of cover for multiple—rather than single—life arrangements, they form a distinct and separate insurance product line. Accordingly, in what follows, 'RLP' refers to single-life policies and 'EGLP' refers to multiple / group life policies.

Carried over from section 539A of the Income and Corporation Taxes Act 1988 in the lead up to ‘A-day’, and currently contained in the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003) and sections 480–482 of the Income Tax (Trading and Other Income) Act 2005 (ITTOIA 2005), EGLPs and RLPs provide lump sum benefits on the death, before age 75, of:

  1. employees

  2. directors (including single directors of a service company)

  3. ‘salaried’ partners taxed under PAYE

The statutory rules governing RLPs apply in the context of an exclusion from Chapter 2 of ITEPA 2003, which concerns relevant benefits from employer-funded retirement benefit arrangements. Section 393B (in which life cover via RLPs is referred to as an expressly excluded benefit) only concerns benefits provided to or in respect of employees or former employees. As such, section 393B does not apply

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