Life assurance premium relief: outline
There are two main categories.
The first category, originally of much greater significance, is obsolescent and has beensince 1984. It is, though, in the nature of life contracts that they tend to last a longtime, and relief continues to be given on policies taken out on or before 13 March 1984,provided they are not subsequently varied so as to increase the benefits or extend theterm. This type of relief, on qualifying life policies, and on others taken out on orbefore 19 March 1968, applies to premiums paid on a contract for life insurance or on adeferred life annuity contract. It is given at source through a net payment of premium tothe insurer. The insurer recoups the deduction directly from HMRC. This relief is referredto as LAPRD, meaning Life Assurance Premium Relief by Deduction. The scheme is known asPRBD, Premium Relief by Deduction, and is administered by Savings Schemes Office.
The second category, which is still live, covers three reliefs, all of which are minor interms of the amount of relief available to the claimant and total cost to the Exchequer.These are
- one half of the part of the premiums attributable to death benefit paid on mixed death and sickness benefit policies issued by friendly societies
- one half of the part of any trade union subscription attributable to death or superannuation benefits paid by the union, including police provident benefits
- contributions made by an employee to secure a deferred annuity to a widow, widower or child dependant, made as a condition of employment or by statutory requirement.
This category of relief is given in coding, through self assessment or by repayment.Sometimes relief is given by the employer under a net pay arrangement underwhich PAYE is operated on pay after the amount qualifying for relief has been deducted.
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