The new rules will limit tax relief to a maximum of £3,600 in any 12 month period.

The existing regime, which dates back to 1968, means for both qualifying and non-qualifying life insurance policies, corporation tax at a special rate of 20% applies to investment returns accruing in the hands of insurers and friendly societies.

To date there has been no maximum limit on the investment premiums payable into a qualifying policy, allowing individuals to obtain unlimited relief from higher rates of income tax.

However, the Government has now said it will limit the relief available, as it does not believe it justifiable or affordable to offer unlimited income tax relief in the current savings and fiscal climate.