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HMRC internal manual

Insurance Policyholder Taxation Manual

Policies issued on or after 21 March 2012 and before 6 April 2013

Premiums exceed £3,600 in any 12 month period

If a qualifying policy is issued on or after 21 March 2012 and before 6 April 2013 - the “transitional period” - and the premiums payable under that policy exceed the annual premium limit of £3,600 which applies from 6 April 2013, that policy will be a restricted relief qualifying policy (RRQP). See IPTM2076.

For RRQPs, this means the full value of the premiums payable in respect of the period from commencement of the policy up to and including 5 April 2013 will be relieved. Any premiums payable from 6 April 2013 onwards will be taken into account for an individual’s annual premium limit.

The individual’s allowable premiums in respect of that policy will therefore be restricted to the lesser of:

  • a maximum of £3,600 per annum with effect from 6 April 2013, or
  • whatever headroom is left from that limit once the individual’s other qualifying policies (which existed at the time the policy became a RRQP and other than excluded policies) are taken into account.

Example

Peter takes out a policy on 22 March 2012. Premiums under the policy are £4,000 in any 12 month period. He has no other policies. Full relief is available for the premiums payable from 22 March 2012 to 5 April 2013. From 6 April 2013, relief will only be available for £3,600 of the premiums payable.

If Peter had also taken out a policy on 21 March 2012 under which premiums were £3,000 in any 12 month period, then he would receive relief for all premiums payable under both policies until 5 April 2013. From 6 April 2013, he would receive relief for all premiums payable under the first policy (£3,000) and relief for £600 of premiums payable under the second policy.