A number of UK life companies are likely to stop offering term assurance offshore following new rule...
As of November 1999 all offshore term assurance products must be Overseas Life Assurance Business (OLAB) certified with the taxation changes this entails.
OLAB is a regime under which the tax burden for overseas residents holding UK life assurance policies is eliminated. The Inland Revenue has relaxed certain requirements, especially those relating to certain declarations about themselves and their policies.
An Inland Revenue spokesperson said: "These regulations will help companies operating in the UK to exploit demand for life assurance products overseas, especially elsewhere in Europe. They will remove some of the tax obstacles that currently make products sold by UK companies unattractive to foreign customers."
Eagle Star is considering the viability of setting up an OLAB and may stop offering offshore term assurance products.
Jane Hewin, spokesperson for Eagle Star International, said: "We accepted offshore business until the end of last year and at present we are actively considering the future of this market.
"We have the resources and the potential but we need to decide on the best approach."
The Inland Revenue regulations relax the conditions that must be met for policies sold to foreign customers to qualify as OLAB, and so receive the tax treatment appropriate to business with policyholders who are not UK resident taxpayers. In particular, the administrative burdens and the requirements for foreign policyholders to make detailed declarations are significantly reduced.
At present companies have to obtain certificates and make declarations about OLAB within certain time limits. In future, all declarations and certificates will have to be obtained at the latest when the company files its return and self assessment.
This will generally give them longer than at present.
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