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Life insurance: personal portfolio bonds

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HMRC is consulting on changes to the categories of assets that life insurance policies can contain without giving rise to an annual tax charge on the policyholder under the personal portfolio bond legislation.

HMRC is consulting on changes to the categories of assets that life insurance policies can contain without giving rise to an annual tax charge on the policyholder under the personal portfolio bond legislation. The legislation was introduced in 1999 to deter the holding of personal assets within a life insurance policy.

The government is seeking views on the following three types of investment vehicle that the fund representative bodies have suggested may be included in the permitted property categories:

·        Real estate investment trusts (both UK and foreign equivalents): These are companies that qualify for REIT status in a jurisdiction that has a REIT regime that is substantially similar to that in the UK (including Australian REITs and most US REITs).

·        Overseas equivalents of UK approved investment trusts: The government is looking for appropriate and practical ways to identify an overseas equivalent of a UK investment trust. This could be based on legal or regulatory requirements, or other more practical ways.

·        UK authorised contractual schemes: Introduced in 2013 as tax-transparent fund vehicles, these may take the form of a limited partnership or a co-ownership contractual arrangement.

The closing date for responses is 3 October 2016. See http://bit.ly/2bc4fqd.

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