Group Life Assurance Plans

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How the Spring Budget affects Group Life Assurance plans

The LTA was a potential tax charge applying to individuals (on death or when pension benefits are taken) if their total accumulated pension and any employer arranged life assurance death benefits exceeds the Lifetime Allowance in any given tax year (£1,073,100 for 2023/24). The value of a life assurance plan is only tested against the LTA if it is written under HMRC ‘registered’ trust legislation as these type of products are deemed to fall under pension legislation.

The Spring Budget 2023 announcement means that from 6th April 2023 the lifetime allowance charge, previously 55%, will no longer apply. From this date any excess above the LTA will be taxed at an individual or beneficiaries’ marginal tax rate. Additionally for these plans there are new employer requirements to notify a beneficiary in the event of a claim that a tax charge may occur.

The current Government is planning to abolish the lifetime allowance completely with effect from the 2024/25 tax year through legislation to be introduced in a future Finance Bill although the Opposition have indicated they would reinstate it. As part of our Employee Wealthcare^TM services we are happy to help and provide further advice on these changes as well as the implications. Please feel free to contact the employee wealthcare team at eewealthcare@cartlidgemorland.com.