Non-Qualifying/RRQP Help needed
LizziSmith
Member
I have a case at the moment where a whole of life policy (started in 1991) was Qualifying up until the premiums were increased to £423 p/mth in 2017 and the qualifying policy declaration was also not returned within the 3 months deadline. This policy became non-qualifying.
Is there a chance the policy became RRQP, and how would I determine this?
Does anyone have any ideas on why it would become non-qualifying over RRQP or where I might go for help?
Aviva - the provider, have not been the most helpful despite repeated requests.
Thank you in advance.
Comments
This may help.
https://www.gov.uk/hmrc-internal-manuals/insurance-policyholder-taxation-manual/iptm2076
Thank you @richardgough
From this I take it that the policy should be RRQP noting that:
"Restricted relief qualifying policies
ICTA88/SCH15/PARAA2
A restricted relief qualifying policy (“RRQP”) is a qualifying policy that will not have full tax relief when a chargeable event occurs.
A qualifying policy becomes a RRQP where:
...
- a variation (see IPTM2080) on or after 21 March 2012 of a qualifying policy issued before 21 March 2012 where that modification results in the premium period being lengthened or the total premiums increased and the beneficiary is in breach of the annual premium limit. This will also be the case if the premium period or premiums payable are decreased on or after 6 April 2013 for a qualifying policy issued before 21 March 2012."
Then in IPTM2080 it states:
"Where a qualifying policy issued before 21 March 2012 is varied by increasing the premiums payable on or after 21 March 2012 that policy will become a restricted relief qualifying policy (RRQP) from the date of the variation if the annual premium limit of £3,600 is exceeded."
Would Aviva potentially be saying that it is a non-qualifying policy when in fact it is RRQP, with the onus of claiming that it is an RRQP falling on those filling out the HMRC paperwork?
I think the answer to that is yes.
The other thing for you to consider is even if the plan is non-qualifying, would a chargeable gain actually occur? It would be surprising if the surrender value exceeded the value of premiums paid. If no chargeable gain then no tax.