HMRC has clarified its position on pipeline pension term assurance business and says those customers that submitted their applications by December 6 will still receive tax relief on life policies.
The industry has been calling for guidance on the treatment of pipeline business since the pre-Budget announcement on PTA two weeks ago suggested that tax relief would be withdrawn after next year’s budget.
Norwich Union head of protection product marketing Louise Colley welcomes the announcement saying the Treasury has done the right thing for consumers in honouring pipeline applications.
The statement from HMRC released today says: “Those customers who have applied for policies on or before the 6th December will be treated in the same way as those whose policies have already been issued – they will continue to benefit from tax relief, and will be unaffected by the announcement in the pre-Budget report.”
HMRC goes on to say that it recognises there will be some customers whose application was not received by the insurance company on or before December 6 even though it had been completed by the customer and submitted to the insurance company on or after that date.
In these cases as long as the application has been has been completed on or before December 6 and receipt is recorded by the insurance company by midnight on December 13, tax relief will still apply.
Insurers will have until April 5 2007 to process this business.
Colley says: “The pre-Budget announcement created considerable confusion in the Pension term Assurance market, leaving customers, advisers and providers unsure of where they stood.
“In today’s announcement, the Treasury has done the right thing for customers, ensuring that those who applied for PTA products in good faith, before the pre-Budget report will have their applications honoured.”