Three consultations into the taxation of various insurance-related products were announced in the Budget on 16 March 2016, as follows:
Life Insurance Taxation
Under current rules, part surrenders and part assignments of life insurance policies can crystallise gains in excess of the real economic gain within those policies. As announced last year, the government will change current tax rules for part surrenders and part assignments of life insurance policies to prevent excessive tax charges arising on these products. The government will consult later this year on alternatives to the current rules with a view to legislating in Finance Bill 2017.
Finance Bill 2016 will include a power to make regulations for the tax treatment of Insurance-Linked Securities at the level of issuers and investors. The government will then consult on the new regulations, which will be finalised by the end of 2016.
Life Insurance policies (Personal Portfolio Bonds)
The government will consult later this year on changes to the categories of assets that life insurance policyholders can choose to invest in without giving rise to an annual charge under the personal portfolio bond legislation.