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L&G tax-favoured qualifying regular investment plan

2nd November 2010 Print

Legal & General has launched the ‘Portfolio Regular Investment Plan' (PRIP), a qualifying regular premium investment plan.

The plan offers a complementary investment option for retirement planning as it allows considerable flexibility to take benefits tax-free.

The plan consists of 100 identical policies, each one being certified as a ‘qualifying policy' by HMRC. The policies are tax-favoured. They comply with HMRC rules about the policy term, regularity and level of premiums, and a minimum amount payable on death, so they do not normally give rise to chargeable event gains.

After 10 years, investors can choose to cash in the plan in part or in full, hold it for further potential investment gain or continue to pay regular premiums for a further 10 years. This flexibility means that PRIP is also suitable for inheritance tax mitigation, repatriation of offshore investments and flexible tax-favoured solutions for saving for school or university fees.

PRIP has a minimum investment of £1,000 a month or £12,000 a year. It has a transparent, unbundled charging structure that allows advisers to agree a level of remuneration with clients that suits their business model.

The plan includes a range of over 120 funds covering all major asset classes, and sectors. Investors can hold a maximum of 20 funds at any one time and are able to switch between funds or redirect where new investments are made.

Jamie Vale, Director, Business Development (Savings), said: "Over recent months the numerous tax changes aimed at HNW individuals has created real demand for additional options for IHT and retirement planning. In particular, the reduction in tax allowance on yearly pension contributions to £50,000 announced this month, will force high earners to look for flexible, tax efficient solutions for their long-term savings needs. Our new Portfolio Regular Investment Plan has unbundled charges and offers a competitive range of funds. This combination should prove an attractive proposition for IFAs advising clients on IHT and retirement planning solutions who may be considering alternatives to pension savings from April next year."

The tax information given is based on our understanding of current tax law and H M Revenue & Customs practice, which may change.  The benefit of any tax treatment depends on a client's individual circumstances.