Commentary

E1.1332 Premium limit for qualifying policies

Personal and employment tax

E1.1332 Premium limit for qualifying policies

Policies taken out on or after 21 March 2012

E1.1332 Premium limit for qualifying policies

Although life assurance premium relief is abolished by restricting the relief to premiums becoming due and payable before 6 April 2015 and actually paid before 6 July 20151, the qualifying status of a policy continues to be relevant thereafter for tax purposes. This follows because a payment on surrender or maturity of a non-qualifying policy or restricted relief qualifying policy, or on the death of the life assured under such a policy, may give rise to a liability to tax in the hands of the policy holder (see E1.440–E1.456E).

FA 2013 introduced a new annual premium limit on qualifying life insurance policies. The amount of premiums payable into qualifying policies for an individual are limited to no more than £3,600 in aggregate in any 12-month period for qualifying policies issued:

  1.  

    (a)     on or after 6 April 2013;

  2.  

    (b)     in the transitional period (ie on or after 21 March 2012 and before 6 April 2013), to be treated as restricted relief qualifying policies; and

  3.  

    (c)     before 21 March 2012 in cases where they have become restricted relief qualifying policies after that date.

Policies issued in respect of new insurances made on or 21 March 2012, and some issued earlier but subsequently varied, are only qualifying policies from 6 April 2013 onwards if they otherwise meet the necessary qualifying conditions and the aggregate premiums payable for an individual do not exceed £3,600 each year. Where the aggregate of

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