The annual premium limit
If the policy is issued on or after 6 April 2013 and the total premiums payable exceed £3,600 or could exceed £3,600 as a result of options or terms within the policy, then the whole policy will be non-qualifying.
Policies issued before this date may be restricted relief qualifying policies (“RRQPs”) - see IPTM2076.
Once a policy is designated a non-qualifying policy because the annual premium limit has been exceeded, that policy will always remain a non-qualifying policy.
If an individual is a beneficiary under several policies that count towards the policy limit and total annual premiums payable under these policies exceed the annual premium limit, the policy or policies whose premiums cause the limit to be breached will not be qualifying policies. Where one beneficiary under a policy is in breach of the premium limit, the policy will be non-qualifying for that beneficiary and all other beneficiaries.
This means that where the limit has been exceeded, a “last in, first out” approach applies so that the most recently issued policy (or policies) will not be a qualifying policy.
Where an earlier policy is varied (see IPTM2080) and, as a result, the annual premium limit of £3,600 is breached, the “last in, first out” approach still applies but the date of the variation is substituted for the original issue date. This may cause the modified policy to become either non-qualifying or a RRQP, even though its issue date is earlier.
A variation occurs if the annual premiums payable under the policy, or the policy term (or both) are increased on or after 21 March 2012. A variation also occurs if the premiums payable under the policy, or the policy term (or both), are reduced on or after 6 April 2013. See IPTM2080.