Life Insurance Available With Tax Relief

Life Insurance Available With Tax Relief.
At last you​ can buy life insurance and get tax relief .​
The breakthrough results from changes in​ the​ Gordon Browns' latest Budget speech but the​ tax relief is​ only available on​ a​ new special sort of​ life insurance policy .​
You can't get tax relief on​ your existing life insurance policies.
These new policies exploit a​ loophole in​ the​ new Finance Bill and should result in​ savings of​ between 5% and 15% for standard taxpayers and around 30% for higher taxpayers.
But there are strings attached! you​ can't add extras on​ to​ your life policy such as​ critical illness cover and the​ insured sum must be a​ fixed sum .​
Neither can you​ have a​ joint policy .​
Basically,​ it​ has to​ be a​ bog standard,​ level term,​ single beneficiary,​ life insurance policy.
Then there are more restrictions,​ but quite honestly,​ these are unlikely to​ pose a​ problem to​ anyone unless they're very wealthy! you​ can't have one of​ these special life policies if​ the​ annual contributions you​ pay into your pension plus the​ life insurance premiums,​ exceed £215,​000 per year .​
Furthermore,​ if​ the​ value of​ your pension fund plus the​ payout on​ your life policy exceeds £1,​500,​000,​ the​ current limit set by the​ Chancellor,​ then the​ excess will be taxed at​ 55% .​
Conventional life insurance policies are excluded from this calculation.
Tax relief on​ the​ premiums is​ automatically collected by the​ life insurance company so you​ pay a​ premium which is​ already reduced by standard rate tax relief .​
If you're a​ higher rate taxpayer,​ you'll have to​ claim the​ extra tax through your self-assessment tax return .​
However,​ once you've told your taxman about your premiums,​ they should automatically continue to​ give you​ the​ tax relief through your tax code.
So why are the​ savings less than the​ value of​ the​ tax relief? Well,​ the​ reason is​ that the​ life companies have to​ administer the​ tax relief and there are certain operational restrictions imposed by the​ Inland Revenue on​ the​ insurance company .​
This means that the​ basic cost of​ these policies is​ a​ little more than conventional life insurance – but after the​ tax relief you​ should save.
As with all these loopholes,​ you​ must be aware that the​ Chancellor could remove the​ tax relief .​
Having said that,​ it​ is​ rare for a​ future tax change to​ be applied retrospectively so you​ are likely to​ be safe .​
Your income could also change and move you​ into a​ lower tax bracket .​
This would reduce your savings.
This new type of​ life policy is​ now available from most of​ the​ big UK insurers and specialist life insurance brokers .​
However,​ you​ won't be able to​ get an​ online quotation – you'll have to​ speak on​ the​ phone to​ a​ Life Insurance Adviser.
And just to​ confuse matters these policies are known under a​ range of​ names: Pension Term Insurance,​ Life Insurance with Tax Relief,​ Life Protection with Tax Relief – but they all mean the​ same thing.
Oh yes,​ let me confirm one miss-understanding .​
No,​ you​ don't have to​ buy a​ pension at​ the​ same time!
Life Insurance Available With Tax Relief Life Insurance Available With Tax Relief Reviewed by Henda Yesti on June 24, 2018 Rating: 5

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