Category: Group risk fundamentals · Reviewed by Taylor Watts, Broker · New Business · Last reviewed 2026-06-10
An excepted group life policy (EGLP) is a group life assurance arrangement written outside the registered pension scheme regime under the “excepted group life policies” rules in section 480 of the Income Tax (Trading and Other Income) Act 2005. Benefits paid from an EGLP are not subject to the lump sum death benefit allowance applicable to registered pension scheme death benefits, but the policy and trust must satisfy specified conditions to qualify as excepted.
Category: Group risk fundamentals Also known as: EGLP, excepted GLP Statutory basis: ITTOIA 2005, s.480 Related concepts: Registered group life policy, Master trust group life, Group life trust
An EGLP is a term assurance policy held by trustees on discretionary trust. To qualify as “excepted” under s.480 ITTOIA, the policy must satisfy six conditions: it must provide only a lump sum benefit on death before age 75; benefits must be paid in the year of death (or within two years); the policyholder/trustees must not be the life assured; the policy must not have a surrender value; tax avoidance must not be a main purpose; and the policy must be held on discretionary trust for the benefit of the employee’s family, dependants or charity.
The statutory framework sits in ITTOIA 2005 sections 480–482. Inheritance tax treatment is governed by the Inheritance Tax Act 1984: because the policy is held on discretionary trust, the trust is subject to the relevant property regime, but the periodic and exit charges are typically nil because the policy itself has no surrender value and the proceeds are distributed within two years of receipt. HMRC published its current view of EGLPs in the Inheritance Tax Manual (IHTM17142) and the Pensions Tax Manual.
EGLPs cover the same lump sum risk as registered group life policies but are particularly attractive for higher-paid employees whose total lump sum death benefit might otherwise exceed the lump sum and death benefit allowance under the registered pension regime (£1,073,100 standard allowance from 6 April 2024). Cover may be written on a single-employer trust or via a master trust.
A law firm whose partners and senior associates have salaries above £200,000 establishes an EGLP at six times salary. A senior partner earning £300,000 dies in service; the £1.8 million lump sum is paid by the insurer to the EGLP trustees who distribute it to the partner’s spouse within 60 days. No lump sum allowance test applies, and no inheritance tax arises because the partner had no entitlement to the policy proceeds during life.
This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-10. Next review: 2026-12-10.
Apex Insurance Brokers Limited. Authorised and regulated by the Financial Conduct Authority, FRN 724952. Registered in England and Wales, Companies House 07014570. This entry provides general information about UK insurance concepts and is not regulated advice. Consult your insurance broker on your specific position.
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