Key Features · For Individuals
Lifetime Private Income Service
Delivered through the Flexible Life Annuity
For clients whose capital is held outside a pension - savings, investments or business-sale proceeds. The Flexible Life Annuity creates a tax-efficient income for life while improving the value passed to future generations.
The Flexible Life Annuity (‘FLA’) is a unit-linked purchased life annuity for non-pension capital, provided by [Provider]. The Gibraltar Financial Services Commission requires that you are given the important information in this document to help you decide whether the FLA is right for you. It should be read alongside your personal Illustration and Key Information Document. This summary assumes you are UK resident and domiciled for tax purposes; seek professional advice before proceeding.
Key tax efficiencies
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Tax-free income up to the tax-exempt sum - a slice of each year’s income is paid free of UK income tax (PLA partial exemption, IPTM4330); unused allowance carries forward, and only income above the cumulative sum is taxed as savings income at the marginal rate.
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No UK CGT on fund switches - the investments belong to the provider, so switching between permitted investments creates no UK capital gains tax liability.
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No corporation tax on growth - the Gibraltar-based provider pays no corporation tax on income or growth within the fund (non-reclaimable withholding tax may apply to some holdings).
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No personal income tax until drawn - no personal income tax charge arises until an annuity payment is taken.
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100% Business Relief on the Preference Share - after a two-year holding period the optional Preference Share is relieved from IHT - from 6 April 2026, 100% on the first £2.5m of qualifying assets and 50% on the excess - passing to the estate, an assignee or a trust.
Aims
- To provide flexible annuity payments at different amounts and frequency intervals.
- To give you and your adviser the opportunity to invest across a wide range of investments to meet your needs.
Your commitment
- To satisfy yourself that you have fully understood the features and risks of the FLA.
- To invest an initial premium of at least £100,000.
Risks
- You have 30 days to change your mind. If you cancel you may get back less than you invested. After 30 days the FLA cannot be cancelled, encashed or surrendered.
- The value of the assets within the FLA can go down as well as up.
- Annuity payments are not guaranteed and may not be supported for life if investment performance is lower than illustrated, or if the payments taken are greater than the investment performance.
- Inflation may reduce the spending power of the annuity payments.
- Investments held in a currency other than Sterling carry additional exchange-rate risk that may affect payments.
- Business Relief is assessed by HMRC on death and is not guaranteed; legislation may change.
- Appropriate independent financial advice should be sought before any decision is made.
Questions & answers
1. What is the Flexible Life Annuity?
A unit-linked purchased life annuity written on a single life basis, designed to provide flexible annuity payments for life or until the funds are exhausted.
2. How much can I invest?
The minimum initial premium is £100,000. There is no maximum.
3. Can I add additional premiums?
Yes, at any time. The minimum additional premium is £50,000 with no maximum. The level of annuity payments is recalculated based on your age, life expectancy and the latest value of the FLA.
4. Who is it suitable for?
UK tax residents aged 18+ with £100,000 or more to invest, who want flexible access to income that can be increased or decreased year to year, who want an estate-planning solution but need to retain access and control during their lifetime, and who may have already used their ISA and pension allowances.
5. Who is it not suitable for?
Non-UK tax residents or those under 18; those with less than £100,000 to invest; those not prepared to accept investment risk; those who require guaranteed payments for life, are solely dependent on the payments, or want a guaranteed annual escalation.
6. How are the annuity payments calculated?
Using your age and premium, an appropriate mortality table and the current gilt yield, we calculate the yearly payment the premium can support over your expected lifetime. Payments can be made monthly, quarterly, half-yearly or yearly, and are recalculated when additional premiums are added and at each three-year review.
7. How is my money invested?
You and your investment adviser can invest across a wide range of permitted investments. 100% of premiums are applied before charges, with sufficient cash retained to cover payments and charges. As a Protected Cell Company, the provider holds your investments in a separate, legally recognised Cell.
8. What happens if I die?
The FLA ceases and no further payments are made. Any remaining value stays in your Cell. If you hold a Preference Share attached to that Cell, the remaining value passes to the person entitled to it - normally your estate, but it can be an assignee or a trust - and qualifies for Business Relief (see key efficiencies above). The Preference Share can also be gifted (seek advice); indicative cost £350–£1,500 for premiums up to £1m.
9. What are the charges?
Establishment charge: a one-off 2% of each premium, capped at £10,000 for the life of the FLA. Annual management charge: 1% of total premiums, capped at £1,600 a year. Financial adviser and investment adviser fees are agreed separately, and other third-party costs (e.g. platform fees) may apply. All charges are set out in your personal Illustration.
10. What tax applies?
The Gibraltar-based provider pays no corporation tax on income or growth within the investments (withholding tax on certain income is an exception). Your personal tax position depends on your circumstances; take professional tax advice before proceeding.
11. How does the tax-exempt sum work?
A tax-exempt sum is set when the FLA commences and shown on your Annuity Schedule. Income taken above it in a year is potentially liable to UK income tax on the excess; any unused amount carries forward. The sum is recalculated when an additional premium is added.
12. Can I change the annuity payments?
Yes - you can increase or decrease payments (down to zero or up to 100%) by giving 60 working days’ notice.
13. Can I encash or surrender it?
No. The FLA cannot be encashed or surrendered, although payments can be increased up to 100% on 60 working days’ notice.
14. Can I change my mind?
Yes - you have 30 days from submitting your application to cancel. You may get back less than you invested if values have fallen or fees have been taken, and you must repay any amounts already paid to you.
15. What if my country of residence changes?
Tell the provider immediately, as the illustration assumes your current country of residence. Seek legal and tax advice before moving permanently, as it may affect how the FLA is taxed.
Further information
The FLA is issued by [Provider], a Gibraltar-registered Protected Cell Company (company registration [Company Reg No.], registered office [Registered Office]) regulated by the Gibraltar Financial Services Commission (permission number [GFSC Permission No.]). Each annuitant’s assets are held in a statutorily segregated Cell under Gibraltar’s Protected Cell Companies Act 2001. You are treated as a retail client. As a Gibraltar insurer authorised to write UK business, UK policyholders are covered by the Financial Services Compensation Scheme (FSCS), which currently covers 100% of the value of a valid claim. The FLA is construed under the law of Gibraltar.
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For professional adviser use only - not for client distribution. This does not constitute financial, tax or legal advice. Tax treatment depends on individual circumstances and is subject to change. Business Relief is not guaranteed. The value of investments can go down as well as up. Appropriate independent financial advice should be taken before any decision is made. Independent advice is required before any recommendation is made to a client.