There is a maximum of 100% of each premium in the case of a contract that lasts more than 20 years

The Core Reading notes on page 208 reads...
Let’s say there is a long-term regular premium contract, which the policyholder part surrenders
after five years. Tax is payable only on the excess paid over (formula) where P* is the annual premium payable.
(There is a maximum of 100% of each premium in the case of a contract that lasts more than 20
years.)

My query: What does does the last sentence(in brackets) mean please.

 

I've not read the relevant Core Reading notes. Nevertheless:

The tax authorities will allow the policyholder to reduce their taxable benefit by the premium paid (in presumably, present value terms). The full taxable benefit is earned over time; and can be thought of as a reward for paying regularly into the long-term contract. It would appear to be the tax authorities attempt to support a long-term savings mindset.

 

Thank you for the clarification.

I also have another question.

If a company is selling both BLAGAB and non-BLAGAB business, will the non-BLAGAB trade profits be considered (included) when determining the BLAGAB minimum profit?

 

Thank you for the clarification.