Existing PTA policyholders could be affected by the changes announced in the pre-Budget report despite Treasury assurance that policies on risk before midnight of December 5 would be unaffected.
Standard Life protection marketing manager Mick James says HM Revenue & Customs has confirmed that if policyholders increase the sum assured or extend the term, the life policy will be ineligible for tax relief after the Budget.
Liverpool Victoria director of intermediary business Stuart Tragheim says HMRC intimated that if a customer makes any changes to a PTA policy in future, it is also likely to invalidate the tax relief available.
Bright Grey products director Roger Edwards warns providers should anticipate the withdrawal of tax relief on existing policies in the Budget next April. Edwards says: “I would not rule out the possibility of another huge U-turn on existing PTA policies.”
CBK principal Peter Chadborn says: “Advisers will have to consider whether the original policy should be kept to keep the tax relief or to exercise the guaranteed insurability options and lose tax relief.”