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E1.1350 Surrender, etc after four years

Life assurance premium relief is abolished in respect of all policies with effect from, broadly, 6 April 2015 (see E1.1300).

Tax relief given on premiums paid under life assurance policies¹ may be subject to recovery by HMRC if the policy holder surrenders or participates in the profits on a policy in the fifth or any later year from inception of the policy². These rules apply to qualifying policies effected after 26 March 1974³. They were introduced to counter an avoidance device whereby tax relief was obtained for premiums paid out of periodic partial surrenders or payments by way of participation in the profits on a policy. Their effect is to ensure that tax relief on an established policy is only granted to the extent that the current year's premium, in effect, remains invested. Industrial business policies are specifically excluded from these rules⁴, as are policies the premiums in respect of which do not qualify for life assurance premium relief by virtue