HMRC internal manual

Insurance Policyholder Taxation Manual

Beneficiaries under a policy

You should check the other guidance available on GOV.UK from HMRC as Brexit updates to those pages are being prioritised before manuals.


The annual premium limit applies to beneficiaries under a qualifying policy. An individual is likely to be the beneficial owner if they paid the premium(s) and they (or the estate after the individual’s death) are entitled to any benefits under the policy.

In order for a policy to be a qualifying policy, all rights under the policy must be owned by an individual, or two or more individuals taken together, when it is issued. The policy cannot be a qualifying policy if rights are held by somebody other than an individual (e.g. a corporate) upon issue. See ICTA88/SCH15/PARAB1. 

Beneficiaries under a qualifying policy

An individual is a beneficiary under a qualifying policy if they are the beneficial owner of any rights under the policy or any share in rights under the policy.

There are two types of ownership, legal and beneficial, that co-exist in any property:

The legal owner is the person(s) in whose name the property is held or registered. ‘Legal owner’ includes a trustee or nominee.

The beneficial owner is the person for whose benefit the property is held.

The same person may be both legal owner and beneficial owner of the life insurance policy. This will be the case where an owner of the policy holds it for his own benefit and not as a trustee or nominee for some other person.

There can be a separation of legal and beneficial ownership. In this case the beneficial owner will be the person who enjoys the benefits of the policy even though another person is the legal owner.