PRODUCT GUIDE
Mortgage Products
Legacy
Disclaimer
Pension Products
Contact
Protection Products
Investment Products
General
GENERAL
INHERITANCE TAX
Life Assurance Policies
When a policy is written under trust, payment of each premium will normally be treated as a gift. These gifts may fall within one or more of the available exemptions but, if not, they will normally be either potentially exempt transfers or chargeable transfers. The total of any such potentially exempt transfers in the seven years before death would therefore become chargeable transfers on death and be included in the final Inheritance Tax calculations. This means that, where the policy is written under a suitable trust from outset, it is the premiums which could be liable to Inheritance Tax - not the claim value of the policy.
Where a policy is assigned into a trust after it has been issued, the value of the gift for Inheritance Tax purposes will be the "market value" at that date or, for policies which have an investment content, the total of the premiums paid less the sum of all payments made out of the policy, if greater. The market value of the policy will, in most cases, be the surrender value (which would be nil for term assurances). However, it is possible the Inland Revenue may argue that there is a greater market value, particularly if there is evidence that the life assured was in poor health at the time of making the gift.
Mortgage Products
Legacy
Disclaimer
Pension Products
Contact
Protection Products
Investment Products
General
INHERITANCE TAX
When a policy is written under trust, payment of each premium will normally be treated as a gift. These gifts may fall within one or more of the available exemptions but, if not, they will normally be either potentially exempt transfers or chargeable transfers. The total of any such potentially exempt transfers in the seven years before death would therefore become chargeable transfers on death and be included in the final Inheritance Tax calculations. This means that, where the policy is written under a suitable trust from outset, it is the premiums which could be liable to Inheritance Tax - not the claim value of the policy.
Where a policy is assigned into a trust after it has been issued, the value of the gift for Inheritance Tax purposes will be the "market value" at that date or, for policies which have an investment content, the total of the premiums paid less the sum of all payments made out of the policy, if greater. The market value of the policy will, in most cases, be the surrender value (which would be nil for term assurances). However, it is possible the Inland Revenue may argue that there is a greater market value, particularly if there is evidence that the life assured was in poor health at the time of making the gift.
