Luxembourg Life Insurance advantages for British Residents

• Possibility of redeeming up to 5% of premiums paid each year for the purposes of deferring tax.
• This redemption amount is cumulative and can be carried over to subsequent years. It is capped at 100% of paid premiums (which will be reached if 5% of premiums are redeemed for 20 consecutive years).
• In the event of a redemption above 5%, tax will be due.¹
• Possibility of redeeming segments of the policy in order to benefit from more advantageous taxation.²
• A way of passing on assets:
  • Contract segments may be gifted during the life of the policyholder in order to reduce the inheritance tax payable by heirs.³
  • Optimisation possible in the event of cross-border estates, where beneficiaries are located outside the United Kingdom, thanks to the double taxation tax treaties signed by the United Kingdom.
  • Life insurance is adapted to the Trust: possibility of excluding a life insurance policy from an estate if it is taken out by a Trust.

^{1* Above redemption of 5% of premiums paid, taxation up to 45% may be due on capital and capital gains.
2* The redemption of segments will only be subject to tax on the share of capital gains relating to the redeemed segments.
3* Gifts can generate a tax benefit because the capital gain on the gifted segments will be taxable at the marginal tax rate in the recipient’s income tax.}

Focus on the allowance of 5% per annum  
British policyholders can redeem up to 5% of the capital invested per annum, free of tax (no taxable event). The 5% allowance can be carried forward and accumulated from one year to the next (tax deferral). Thus, the partial redemption of 5% will be taken into account in the event of total redemption. The calculation of the 5% allowance per annum starts with the opening of the contract under British law, and is renewed on each anniversary date. The unwinding of the contract is a taxable event in the United Kingdom. The taxable gain will be determined by:
(the redemption value of the policy) + (the amount of the partial redemptions made) – (the amount of capital invested)
– (the possible taxable base on partial redemptions made)