I hope everyone noticed how quickly the Treasury reacted to remove PTA once it calculated what the tax break on the new regime was likely to cost? I wish I could believe that there was some hope of a breakthrough on it being reintroduced, but I would be more hopeful of a half-way house being considered and approved.
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One of the aspects of PTA that is most likely to be disliked by the legislature is that 40 per cent relief would be available to higher rate tax payers and there would therefore be a huge and costly take up of this product among this section of the population.
Would it not be better to lobby for a re-introduction of a simple flat rate of relief off the life premiums? I think there would be a better chance of success if the relief was not even related to the pensions regime. If this incentive had to be named in some way, it could be called Life Assurance Premium Relief – LAPR for short.
This rate of relief would be set at a fixed percentage for all policies and it doesn’t even need to be related to any tax rate – I’d be happy to see it at 20 per cent or even 15 per cent. The last incentive package on life products – strangely also called LAPR – was removed exactly 23 years ago and used to be set at half the rate of basic tax relief.
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An interesting point is that we are only two years away from the last of the LAPR-benefiting 25-year endowments reaching maturity and the Treasury will be free of the encumbrance of that tax incentive. The chances are that there are only a minute percentage of ‘whole of life’ plans still in force that also still benefit from LAPR – this could be an ideal time to plead for an incentive to be re-introduced.
Whereas the previous LAPR was available on ‘whole of life’ products and the burgeoning endowment market, the new LAPR would be strictly available only on term, double taxation agreements and family income benefit policies.
Is there even the merest sign from the Treasury that there is anyone listening to the PTA arguments? If not, can I urge the ABI through this letter to change tack – I obviously hope this isn’t so, but I do fear that the time spent on PTA may just be like flogging a dead horse.
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Can I add how I would use LAPR to benefit the clients? I would use the saving to set up more single life policies instead of joint and I would write many more policies over longer terms.
While people may be taking up cudgels to lobby further with these ideas, any chance of us poor mortgage advisers being able to write term insurances up to age 75 and not just 70?
Best wishes
Frank Jurga
Swindon Mortgage Services
1Jolliffe Street, Swindon
