How your tax relief on insurance will reduce

Friday 12th January 2007, 12:00AM GMT.

ANY Islander who has signed up to a life insurance policy after 1 January this year will no longer be able to claim tax relief on the premiums.

And holders of existing policies will find their tax relief progressively reduced with effect from the 2007 assessment. The Income Tax Department has issued explanatory guidelines this week which outline the significant changes which have come into effect from the start of this month. Until now any resident taxpayer with a life assurance policy has been entitled to claim back tax relief on premiums paid during the previous year, up to 7% of the capital sum assured for each policy taken out. For example, if someone had a policy which would pay out £100,000 on their death and paid a premium of £8,000 during the year, they would have been entitled to tax relief on £7,000 of that premium. That same relief would also apply to any additional policies.

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