PPP lifetime care has scotched recent press reports which claimed the insurer was guilty of breaching tax rules on its long term care policies.
It was claimed that PPP’s Immediate Lifetime Care Plan, which was launched in 1993, may violate rules that would allow benefits to be paid tax free to claimants.
Paul Bennett, a spokesman for PPP lifetime care said there had been confusion in the press reports about the plan.
“The Inland Revenue was asked that if cash was paid to a policy-holder,then would it be subject to tax. The Inland Revenue rightly answered that yes, it would. But it was given an incorrect version of our plan. We don’t give cash, we have a contract with care providers to provide care services. “This treatment of benefits means that they are tax free,” he said.
He added there had never been any misunderstandings between PPP, the Inland Revenue and the DTI, who were all fully aware of the immediate fees plan.
“We were a little aggrieved about the story but we sent our previous communications to the Inland Revenue and they quickly wrote back and said that as the benefits didn’t represent income in the hands of the person in care, they were not subject to tax.”
As a result of the negative publicity, PPP lifetime care has had to act quickly to reassure its IFAs the media stories were incorrect.
IFA Margaret Borwick, principal of Surrey-based Durkadale Professional Financial Planning, who is a long term care specialist, said she had never believed there had been a problem with PPP’s immediate fees plan.
“The major point that appears to have been missed is that if the PPP life time care immediate fees plan had been in breach of the regulations, so too would everybody’s pre-funding plan, as they are all written under the same section,” she said.