September 2006

Life Assurance with 40% Tax Relief

It is now possible to buy life assurance with up to 40% tax relief.

With effect from 6 April 2006 you can buy a “Pension Term Assurance” policy and benefit from pension based income tax relief. Don’t be put off by the word “pension” as you don’t need to be saving in a pension scheme to buy one of these. The policy must have a specific term, say to age 65, and if you die within the term it pays out.

The new legislation allows any UK resident under 75 to buy one of these policies with tax relief, and instead of paying the full premium everyone pay premiums net of basic tax relief (currently 22%). Higher rate tax payers can claim higher rate tax relief reducing the gross premium by 40%.

There are a number of other factors that you should consider:

• there is a maximum annual amount
• there is a limit on the total death benefit payable
• it will be subject to satisfactory medical underwriting
• switching could lose other benefits such as critical illness cover
• if you are no longer eligible for tax relief your cost will increase
• existing policies should never be cancelled before a new policy has started

Please note this communication does not constitute individual or personalised advice.

If you have any doubts about the suitability of this product for your circumstances please contact us and we will introduce you to an independent financial advisor.