Inheritance Tax (IHT): The payout from a whole of life policy is generally considered part of the deceased's estate for inheritance tax purposes. If the total estate exceeds the IHT threshold, the payout may be subject to tax. However, if the policy is written in trust, the proceeds can be excluded from the estate, avoiding IHT.

No Tax Relief: Unlike some pension contributions, premiums paid for whole of life assurance do not attract tax relief. This means that the cost of premiums is paid from after-tax income.

Using Trusts for Tax Efficiency: Writing the policy in trust can provide significant tax benefits. This allows the payout to be made directly to beneficiaries, bypassing the estate and potentially reducing inheritance tax liabilities.