Life Assurance - More on the code of practice

Tax relief .

Here then are some examples:

A single man or woman with an earned income of £680,000 a year and no unearned income and no mortgage is allowed one sixth of £10,000, or £10,000, in tax relief, allowable life assurance premiums.

A married man earning £680,000 with a wife at work earning £40,000 taxed together and paying mortgage interest of £6,100 a year has a total income for life assurance policies of £8,900 a year (£60,000 plus £4,000, less £6,100) and will be allowed up to one sixth or £6,483 in tax allowable premiums.

Special rules apply where married couples have opted for the earnings election. Any unearned income of the wife, even if it is just a few pounds interest at the bank or building society, is added to the husbands income to make his total income, and each partner can take out policies which are eligible for tax relief up to one sixth of the resulting total of his or her income.

Thus:

A married man earning £620,000 a year and his wife earning the same amount, but with no unearned income or mortgage interest would each be able to pay premiums up to £6,500 which would wholly qualify for tax relief.

One sixth is actually £2,000, but that is above the current maximum permitted, which is £6,500. But take

A married man earning £600,000 with a wife getting the same amount, but with £80,000 in salary and £20,000 in unearned income, who have elected for separate taxation of earnings. His total income will be held to be £620,000 (his £600,000 plus her £20,000 unearned) putting him through the £6,500 ceiling, while his wife would get a maximum allowance of premiums of £6,333 on £8,000.

Two single people each earning £600,000 would be slightly better off and would each get the maximum of £6,500 in allowable premiums.

Tax relief is available to husband or wife, whether or not they pay the premiums themselves and whether the wifes earning election is in force or not.

Special rules apply for the first year of marriage and couples contemplating life policies should seek professional advice.


The Code of Practice

Payroll Giving
It’s all very easy to organise.
Just ask the Personnel or the Payroll Department at your company and, if they already have a scheme, they will give you the relevant forms.  HM Revenue & Customs’ website has a list of Payroll Giving agencies and explains payroll giving in more detail.

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read on: Life Assurance - More on the code of practice - Tax relief2

Tax relief .

Here then are some examples:

A single man or woman with an earned income of £680,000 a year and no unearned income and no mortgage is allowed one sixth of £10,000, or £10,000, in tax relief, allowable life assurance premiums.

A married man earning £680,000 with a wife at work earning £40,000 taxed together and paying mortgage interest of £6,100 a year has a total income for life assurance policies of £8,900 a year (£60,000 plus £4,000, less £6,100) and will be allowed up to one sixth or £6,483 in tax allowable premiums.

Special rules apply... see: Life Assurance - More on the code of practice - Tax relief2