Life Insurance. Special Urgent Alert. Page 2

The Association of British Insurers (ABI) is meeting the Treasury

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this week to discuss the situation thrown up on life insurance policies by these tax changes. The insurance industry believes that the Government brought in the package of anti IHT { motor insurance quotes } avoidance measures, which included life insurance policies written in trust, without fully appreciating the impact on the man and woman in the street. Some commentators believe that the Government will back track and take life policies out of these anti trust measures. We'll see!

Even if the new tax measures are not rescinded, existing life insurance policy holders should be aware of the transitional arrangements which will reduce their estate's tax bill. The Treasury is saying that only the part of the policy that was in force after budget day will be caught in the IHT net. This means that if you have a 15 year policy for { pet insurance } £100,000 and it has already been in force for 5 years, then only 66.6% of any payout would be subject to the new 6% tax - so in this example, { mortgages } your estate would have to pay tax of £3,999.96 if your estate, excluding the insurance payout, fully exceeded the IHT £285,000 threshold.

We will provide our readers with an { loans } update as soon as we hear the outcome of the ABI's meeting with the Treasury this week.