Thanks to a loophole in the Finance Bill announced in the spring 2006 budget, some life insurance policies will benefit from tax relief. This article explains what this means to you.

Budget finance loophole means tax relief on life insurance

Author: Anna Richardson (cheap health insurance)

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In every budget, there are upsides and downsides. This is one of the upsides where the new Finance Bill makes it possible for some life insurance policies to offer tax relief to customers. This is not a retrospective measure however, only new policies completed after the budget can offer the benefit.

(medical insurance)

Those that are eligible will save money to the tune of 5% -15% for taxpayers who pay at the standard rate, and up to 30% for those that pay higher rate tax.

The rules are quite strict on the type of policy that can benefit. For example, ( life insurance policies ) it must be a straight life insurance policy, you cant have critical illness insurance on there too. You must also fix the sum to be insured at the outset, and it must also be for a single life only. The tax relief is not available for joint policies. If you can meet the above criteria then you may well save money with one of these policies.

Other restrictions that apply to these policies but will not ( car insurance cover ) affect many people are:

• Life insurance premiums and pension payments that amount to more than ( mortgages ) £215,000 a year are not eligible. (cheap loan)

• A combined pension fund and life insurance payout value of more than £1,500,000 will be taxed at 55% on the excess. Conventional policies are not subject ( cheap mortgages ) to this particular rule.

How does it work?

Standard rate taxpayers will have the tax relief calculated automatically by the life insurance company, so they will pay lower premiums with the tax relief already applied. (home insurance quotes)

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