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Life Assurance Premium Relief

  • How will the stopping of LAPR affect my policy?
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Life Assurance Premium Relief (LAPR)

Her Majesty’s Revenue and Customs (HMRC) pays Life Assurance Premium Relief (LAPR) of 12.5% of each premium for most qualifying life insurance policies taken out before 20 March 1984. Moneybuilder policies issued by RNPFN after this date also benefit from LAPR. The Government has now decided LAPR will be stopped for all policies from 6 April 2015.

This means we’ll no longer be able to claim 12.5% of each premium from HMRC in respect of LAPR from 6 April 2015 and policyholders will now need to pay the whole premium themselves. We’re writing to all our policyholders affected by this to let them know how much the premium they need to pay is increasing by.

Why is my Industrial Branch policy premium not changing?

For Industrial Branch policies, the benefit from LAPR is included by increasing policy values, rather than the policyholder paying a reduced premium. This means that policyholders’ premiums will not change from 6 April 2015 but the LAPR claimed until 5 April 2015 will still be taken into account when we calculate policy values.

How did LAPR work?

As LAPR provided income tax relief of 12.5%, if an annual premium was £100 the policyholder would pay £87.50 and we would claim £12.50 from HMRC.

Are all policies taken out before March 1984 affected?

No, mainly only eligible qualifying life assurance policies taken out before 14 March 1984 were entitled to receive LAPR. There were special rules for RNPFN Moneybuilder so contracts taken out before and after March 1984 attracted LAPR. This is often only in relation to the first £100 of the yearly premium – maximum relief of £12.50. Customers could lose eligibility to benefit from LAPR if they moved aboard. LAPR will be stopped on premiums paid from 6 April 2015. We’ll be writing to affected policyholders to let them know the increase in the premium they’ll pay.

Are RNPFN Moneybuilder policies treated differently?

Separate legislation applied to RNPFN Moneybuilder policies. Broadly speaking, most Moneybuilder policies issued from 1985 benefitted from LAPR on the first £100 of the yearly premium. This meant we could reclaim £12.50 of each yearly premium from HMRC. Older Moneybuilder policies benefitted from LAPR on 12.5% of their whole premiums. Customers could lose eligibility to benefit from LAPR if they moved aboard.

LAPR for all Moneybuilder policies will be stopped on premiums paid from 6 April 2015. We’ll be writing to the affected Moneybuilder policyholders to let them know the increased premium they will need to pay.

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You can contact our UK-based team for more information:

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