• From 6 April 2013 new qualifying policies have a premium limit of £3,600 a year per beneficial owner (see note 2).
• This limit is aggregated across all qualifying policies that fall under the new rules which are beneficially owned by the same individual.
• Where an investor holds more than one affected policy, if they exceed the limit, the policy or policies that take the premium over the £3,600 a year limit will be fully non-qualifying if taken out after 20 March 2012.

• Policies started between 21 March 2012 and 5 April 2013 will continue to be qualifying, with no premium restriction but if their premiums exceed £3,600 per year they will be known as Restricted Relief Qualifying Policies (RRQP). This means from 6 April 2013, the tax advantages of these policies will be restricted to the gains arising from the first £3,600 a year of premiums. However, where premiums are less than £3,600 per year and are then increased to more than £3,600 per year on or after 6 April 2013 the policy will become fully non-qualifying.
• Policies started before 21 March 2012 will be brought into the new rules if any policy options have been or are exercised after 20 March 2012. This includes partial surrenders made from the policy, most assignments and the death of the benefical owner. These policies will also be known as Restricted Relief Qualifying Policies.
• Policies in force before 6 April 2013 that are subject to the new rules will need to be included when considering the £3,600 premium limit.

• All qualifying policies (whole of life or endowments) taken out on or after 21 March 2012.
• Any qualifying policy in force before 21 March 2012 where a policy option is exercised after 20 March 2012 and their premium exceeds £3,600 p.a. on their own or with other qualifying policies under the new rules.

• Qualifying policies in force before 21 March 2012 which are not changed after 20 March 2012. These are ‘protected policies’.

• New policies starting on or after 6 April 2013 cannot be qualifying policies if the aggregated premium per beneficial owner exceeds the £3,600 a year limit.
• The qualifying premiums on all qualifying policies falling under the new rules will be subject to a premium cap of £3,600 a year from 6 April 2013.
• Gains arising from premiums in excess of the cap from that date will be subject to chargeable gains taxation.
• Where premiums are increased to more than £3,600 on any policy issued after 20 March 2012 any time after 6 April 2013 the policy will become fully non-qualifying from the date of increase.
• Premiums accrued into qualifying policies during the transitional period will remain qualifying.
• Any qualifying policies that started before 21 March 2012 that have options exercised will fall within the new capped regime from 6 April 2013. These policies can continue to have their premium levels increased without impacting qualifying status if they remain below £3,600 per annum. If premiums increase to more than £3,600 per annum, benefits accrued before 6 April 2013 and benefits derived from the first £3,600 per year premium thereafter will remain qualifying.
• Any qualifying policy starting on or after 6 April 2013 whose premiums take the total yearly payments into all qualifying policies (that are subject to the new rules) over the £3,600 cap will be entirely non-qualifying and any gains from it will be taxable.
• Where premiums paid to qualifying policies that are subject to the new rules (aggregated with any other qualifying policies subject to the new rules) remain below £3,600 a year, there is no impact.
• For qualifying policies issued after 20 March 2012, where premiums paid (aggregated with any other qualifying policies subject to the new rules) remain below £3,600 a year, they will continue to be fully qualifying.
• Assignment of a policy will cause that policy to become fully non-qualifying unless it is an excluded assignment. An excluded assignment will cause a policy to be tested against the premium limit (Note 1).
• Assignment of a policy in connection with security on a debt or discharge of a debt will not affect the policy in any way.
• If a policy is jointly owned the full premium of the policy will count towards each policyholder’s limit.
• Where a policy is held under trust the beneficial owner (see Note 2) is the creator of the trust in the case of Discretionary or Flexible Trusts and the absolute beneficiary in the case of an absolute trust.
• Normal chargeable event rules will apply, including top-slicing which means that, even where a chargeable gain arises, any tax liability will be dependent on the beneficial owner’s tax position at the time.
• Premiums maintained for the sole purpose of paying off an interest-only mortgage will be protected.
• Any provision for the waiver of premium is ignored for premium limit purposes.
• A Statutory Declaration must be made by the beneficial owner of a policy within 3 months of any premium limit event, variation, assignment or the death of a beneficial owner.
• When a beneficial owner dies the policy must be retested against the premium limit in the hands of the new beneficial owner.
• Contractual automatic increases will not affect the qualifying status of a policy.

• A premium variation
• Exercise of the extension option
• A partial encashment across all policies
• Some assignments
• Death of a beneficial owner

Note 1 (excluded assignments)

The Government has decided that the following assignments should not result in automatic loss of qualifying policy status: The policies will become RRQPs

• Assignments as part of a divorce settlement
• Assignments as a result of a court order
• Assignments between husband/wife and between civil partners
• Assignments into and out of trust
• Assignment to and from legal personal representatives

Assignments that have no effect on qualifying status

• Assignment by way of security for a debt
• Assignment by way of discharge of a debt

All other assignments will result in the policy becoming fully non-qualifying from the date of the assignment.

Note 2 (Beneficial owner)

An individual will be a beneficiary under a policy if he/she beneficially owns any rights under a policy or any share in any rights under a policy. An individual will also be considered a beneficiary under a policy if any rights under the policy are held on non-charitable trust created by that individual and there is otherwise no individual that is a beneficial owner.