Posted by Nick Turpin on 20 Aug 2012

Consultation Over the Tax Treatment of Life Insurance Policies

Under present UK tax rules it is possible for holders of life insurance policies issued by foreign insurers to claim a time-apportioned reduction in the level of the taxable gains to take into account periods when they were not UK tax resident during the life of the policy. This apportionment is not currently available to holders of policies issued by UK insurers.

HM Revenue & Customs (HMRC) have announced a consultation into extending the time-apportionment reduction to UK policy holders.

The consultation will run for 12 weeks from 13 August to 5 November 2012, with HMRC inviting views from the life insurance industry and from other interested parties. In due course any views will be carefully assessed when preparing the necessary legislation which will then be published for further consultation.

HMRC’s review into this matter is welcome is it should hopefully remove the current discrimination between foreign and UK policies.

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