Whether or not correction of the error is a variation causing loss of protected status depends on the nature of the error. So 57 months of the total period of ownership qualify for relief.
Protected policies under an occupational pension scheme Paragraphs 6 and 7 Schedule 18 Finance Act The normal rule that life assurance premium contributions cannot receive tax relief does not apply where the non-group life policy personal term assurance policy is a protected policy. Where part way through a tax year a policy ceases to be protected these rules only apply to contributions paid after the date the policy loses protection. Variations to a protected non-group life policy gives more information on what is, or is not, a variation that would cause loss of protected status.
These are: the member is resident in the UK when the contribution was made, and the member has relevant UK earnings chargeable to UK tax, rekief the contribution is paid to a qualifying overseas pension scheme, and the member was a member of the qualifying overseas pension scheme before they became resident in the UK, and continued to be a member of that scheme when they became resident in the UK and made contributions to that scheme, and the member was at any time in the 10 years before the beginning of residence in the UK entitled to tax relief in respect of contributions to the scheme under the law of the country or territory in which the member was then resident, and the scheme manager has notified Maual member that they will advise HMRC of any benefit crystallisation events in respect of that member the member has notified the scheme manager of an intention to claim relief.
Protected policies under a non-occupational pension scheme Unless it has been varied, see below, a non-group life policy held for the purposes of a registered pension scheme that is not an occupational pension scheme is a protected policy if it was issued in respect of insurances made and held for the purposes of a registered pension scheme before 6 December Where the policy of insurance was issued in respect of insurances made before 6 April only variations made after 20 March can cause loss of protected status.
Therefore if the individual has only one other residence, there is no need to make a nomination in favour of the property which is intended as the main residence in due course. Contributions made by or on behalf of the member, aged under 75, to pay premiums to this type of policy may be a relievable pension contribution. Errors in setting up the policy An error may have been made in setting up the insurance policy.
Where the error is not connected with either the policy term or the amount assured, e. He retained the property for a while but sold it in December There may be circumstances where the dwelling house is let or used for some other purpose whilst the individual occupies the job related accommodation. If a policy allows an individual to reduce cover and then increase it back to its original level with no further checks this would be the exercise of a contractual option and not a variation triggering loss of protected status.
Any increase in benefits would trigger loss of protection.
See Variations to a protected non-group life policy below for more information on what does and awnted not constitute a policy variation. See Protected policies under an occupational pension scheme for an explanation of when a policy held in respect of an occupational pension scheme is a protected non-group life policy.
Where the terms of a policy are altered because releif a dependency on another contract this would not be a variation. Any contributions paid before: 1 August to an occupational pension scheme, or 6 April to a scheme that is not an occupational pension scheme cannot be life assurance premium contributions and so can be relievable pension contributions eligible for tax relief.
See CG W is entitled to relief for the 48 months that he intended to occupy the house as his only or lnly residence. If the mistake was made on the application form, e. A variation in the terms of a protected non-group life policy that increases the benefits payable under the policy, or extends the period over which benefits are payable, will cause the policy to lose its protected status.
However if the intention to occupy the dwelling house ceases then the dwelling house is no longer treated as a residence. In June his circumstances changed and he decided that he no longer wanted to retire to the coast.
However the substitution of a protected policy by another policy would be a new policy that would not be a protected policy. Life assurance premium contributions Section A Finance Act Life assurance premium contributions are contributions paid by or on behalf of a member to a registered pension scheme on which tax relief is not given because either: the payment of the contributions constitutes the payment of premiums under a non-group life policy, or the person by whom the contributions are paid intends the contributions or an amount equivalent to them to be applied towards paying premiums under a non-group life policy Contributions to a non-group life policy will not be life assurance premium contributions for as long as the policy is a protected policy see Protected policies under an occupational pension scheme and Protected non-group life policies under a scheme that is not an occupational pension scheme.
Variations to a protected policy under a non-occupational pension scheme A protected policy will cease to be protected only if there is a variation to the policy terms which: increases the benefits payable under the policy or extends the period during which benefits are payable. In the absence of a nomination, the main residence must be established by reference to the facts, see CG Contributions for personal term assurance that cannot receive tax relief are: contributions that are life assurance premium contributions - see Life assurance premium contributions above, and which are paid to an insurance company to provide death benefits under a non-group life policy- see Non-group life policies below.
Where the policy was issued in respect of insurances made after 5 April but before 6 December only variations made after 5 December can cause loss of protected status.
Some pension schemes allow members to pay for additional death in service benefits through additional contributions AVCs. Contributions paid by or on behalf of the member to pay premiums for these types of policy will not be relievable pension contributions and so cannot receive tax relief A policy that will pay out benefits on Manuap death of more than one individual and where the individuals covered by the policy are not connected will not be a non-group life policy.
The only exception is where the policy was reinstated before 1 August and all the conditions described above are met. For example the policy may set the level of benefits as a percentage of earnings, or increasing in line with inflation.
This will not prevent relief from being available, although if the lease of the dwelling house extends beyond the period of expected occupation of the job related accommodation, this may be evidence that there was no intention to occupy the dwelling house at the end of the period. Lapsed policies When a protected policy lapses, for whatever reason, this will normally trigger loss of its protected status which cannot be restored if the policy wsnted later reinstated.
An option is a change in the benefits or the term wanter the policy that applies without the need for any further agreement.
Connected has the meaning as given in section A 8 Finance Actthat is broadly as members of the same family. Where cover is provided on a group basis tax relief will continue to be available for contributions made to such schemes because the policies will not be non-group wantes policies. Lapsed policies The reinstatement of a policy that has lapsed will normally be treated as a new policy and so will not be protected.
Variations to a protected non-group life policy Only a change to the policy conditions that either: increases the benefits payable, or extends the term over reliwf benefits are payable under the policy will cause a non-group life policy to lose its protected status.
As a result contributions will cease to be eligible for tax relief after the variation to the policy. It should be clear by comparing the legislation with the terms of the insurance whether or not the policy is a non-group life policy. See Reliff non-group life policies under a scheme that is not an occupational pension scheme for an explanation of when a policy held in respect of a registered pension scheme that is not an occupational pension scheme is a protected non-group life policy.
Where: the amount of the premiums under the non-group life policy in a tax year is more than the amount of contributions intended to be applied towards paying the policy premiums, and other contributions not intended wanter pay the policy premiums have been paid by or on behalf of the member to the scheme in that tax year all or part of those other member contributions are treated as life assurance premium contributions up to the value of the policy premiums.
He has a licence to live there for as long as he is an employee. So where the contributions paid to the scheme by or on behalf of the member in a tax year are less than the amount of premiums under a non-group life policy in the tax year, all those contributions are treated as life assurance premium contributions and so are not relievable pension contributions.
Variations to a protected policy under an occupational pension scheme A protected policy will cease to be protected only if there is a variation to the policy terms which: increases the benefits payable under the policy or extends the period during which benefits are payable. The policy as set up would not reflect the contract entered into by both parties and the change would simply be to Mqnual that.
In all other cases, it is only variations made after whenever relieg policy became a protected policy that can cause a loss of protected status.
Where the benefits under the non-group life policy relate to the death of one or more of a group of individuals a contribution paid by or on behalf of more than one member should be apportioned between each member based on the particular circumstances on a just and reasonable basis. Where the contributions paid to the scheme by or on behalf of the member in a tax year exceed the amount of premiums under a non-group life policy in that tax year, the contributions up to the amount of the policy premiums will be treated as being life assurance premium contributions and so are not relievable pension contributions.