Tax plea on life policies in trust for charities
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The Charities Assurance Brokerage is calling on HM Revenue & Customs to offer tax relief on life assurance policies written in trust for charities.
It is also urging advisers to discuss writing life policies in trust for charities with their clients. If a life insurance policy is written in trust for acharity, the entire proceeds go to the charity instead of the estate when the donor dies.
The Charities Assurance Brokerage is a subsidiary of JA Lawson Health and Life Insurance, and specialises in setting up policies in this way.
General practitioner Jim Lawson says tax breaks would encourage far more people to donate the proceeds of their life insurance policy to charity, making a big difference to a charity’s income in the future.
He says: “I have been working on HMRC to try to get them to agree that someone making a donation in this way should qualify for tax relief. It would mean the charity could have some money now, as tax relief associated with the gift aid, as well as the money at the end when the donor dies.
“The HMRC is digging in. It regards such an arrangement as for non-charitable purposes but we hope one day they will see the light. It would cost them pennies at one end but would save millions for them at the other end because it would take charities off their backs.
“But people should still take out policies in trust for charities irrespective of this and every IFA should raise this with their clients on a regular basis to see if they would be interested. A lot of people will not be but some might. It is so simple and if this was being done on a regular basis, the cheques would just come floating in to the charities.”
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