FAQ's – Life Insurance – Qualifying Policies - HM Revenue & Customs

The gain chargeable to tax is reduced using the statutory formula:
Gain x Total amount of allowable premiums payable
Total amount of premiums payable
In this case the calculation would be:
£100,000 x (£56,000 + £Nil) = £50,450
£111,000
The taxable gain is:
Gain £100,000
Less reduction of £50,450
Revised gain £49,550
11) Multiple ownership
Pete and Lucy are the beneficial owners of a policy taken out in May 2014. Annual
premiums under this policy are £3,000.
Pete takes out a further policy in September 2014 with annual premiums payable of
£300.
Lucy takes out a further policy at the same time with annual premiums payable of
£700.
Both of Pete's policies will be qualifying policies because his premiums payable
annually (£3,000 + £300) do not exceed his annual premium limit of £3,600.
The policy taken out by Lucy in September 2014 will be non-qualifying because her
premiums payable annually (£3,000 + £700) exceed his annual premium limit of
£3,600.