Summary
The 2006 Spring Budget changed the treatment of some life policies written in trust. This article explains the tax position unveiled by the Finance Bill.
Life Insurance. How the new regulations affect policies written in trust.
In his spring Budget the Chancellor Gordon Brown announced swinging
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Then, following the publication of the draft Finance Bill, the estimates fell to 1 ( medical insurance ) million people. So, with specific reference to life insurance policies written in trust, what's happening?
Well firstly before we go any further, we have to make the point that this article is commentating on the position based on the first draft of the Finance Bill - and it'll be early July 2006 before that bill becomes law. As I write, the legislation still has to pass through parliament and it's possible that the situation could change yet again. If it does I will keep you informed.
Within weeks of the budget speech, the Government retreated from its ( cheap mortgages ) previously held position that all life policies written in trust are caught by the new legislation. The current position is that if your life insurance policy was written in trust before budget day 2006, then the money in the trust remains totally free of tax and fees. The legislation is not now to be retrospective. That's one headache dispensed with.
However, if your policy was written in trust after the Spring Budget Day in 2006, then ( best mortgages ) the new tax rules do apply.