Cashing in my Endowment
Rapid64k
Posts: 21 Forumite
Hi,
I have a £60,000 Endowment with a surrender value of £45,124.92. (with profits)
It has been running for 19 years with only 6 years and 5 months remaining. The Endowment is on track at 4.5% with an estimated mature value of £69900.
My mortgage has 7 years 5 months remaining with only £33,768 remaining to pay.
Now that my fixed term is up for renewal I thought it best that I surrender my Endowment and pay off the remaining mortgage.
I noticed on the surrender that it says that I may or mat not be liable for tax on the amount.
I called CountryWide Assured and they told me that they are not allowed to tell me and that I need to speak to a Finance Adviser or call my Tax office!
I wasn't happy with their reply so the chap said that someone will write to me in 5 to 10 days.
Could anyone offer any advice on why they cannot say if I will pay tax or not.
Also am I right in trying to be Mortgate free than waiting another 6 years?
Thanks.
I have a £60,000 Endowment with a surrender value of £45,124.92. (with profits)
It has been running for 19 years with only 6 years and 5 months remaining. The Endowment is on track at 4.5% with an estimated mature value of £69900.
My mortgage has 7 years 5 months remaining with only £33,768 remaining to pay.
Now that my fixed term is up for renewal I thought it best that I surrender my Endowment and pay off the remaining mortgage.
I noticed on the surrender that it says that I may or mat not be liable for tax on the amount.
I called CountryWide Assured and they told me that they are not allowed to tell me and that I need to speak to a Finance Adviser or call my Tax office!
I wasn't happy with their reply so the chap said that someone will write to me in 5 to 10 days.
Could anyone offer any advice on why they cannot say if I will pay tax or not.
Also am I right in trying to be Mortgate free than waiting another 6 years?
Thanks.
0
Comments
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Could anyone offer any advice on why they cannot say if I will pay tax or not.
This is because they do not have the regulatory remit to make such a statement. Only an accountant or financial adviser can. It may also require a phased surrender over multiple tax years if you are borderline higher rate.
Financial services is regulated and segmented into areas of business with different permissions. Most providers nowadays have no advisory permissions. So, they can only answer questions that are factual about their product. They cannot offer opinion or advice on personal circumstances without breaching their permissions. They also do not train their staff to the standards needed if they did have those permissions. So, even if a staff member attempted to answer to keep you happy, they may not have the slightest clue about it.
If your endowment is a qualifying plan then at 19 years you have met the qualifying criteria and could surrender it with no tax liability.
If your endowment is non-qualifying, then it taxable either on surrender or maturity. However, basic rate is considered to have been paid internally so its only an issue to you if you are a higher rate taxpayer or above or close to being a higher rate taxpayer where the gain after top slicing relief takes you into the higher rate band. Partial surrenders in the remaining years could mitigate tax.
Most endowments are qualifying but a very tiny number were not. From memory, Countrywide and Hambro had some non-qualifying ones.Also am I right in trying to be Mortgate free than waiting another 6 years?
Not necessarily but not enough info to go on.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
Thanks for your reply dunstonh.
I would not count myself as a high rate tax payer so It looks like I should be ok.
As most people I originally took the Endowment to repay my Mortgage but switched to a repayment Mortgage a few yeas ago, as I originally took out the Endowment to pay off my Mortgage i feel that I should do just that.
This would allow me to carry out some house alterations now with the extra cash I would save from not having to pay the Mortgage and Endowment every month.0 -
Most providers nowadays have no advisory permissions. So, they can only answer questions that are factual about their product. They cannot offer opinion or advice on personal circumstances without breaching their permissions.
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If your endowment is a qualifying plan then at 19 years you have met the qualifying criteria and could surrender it with no tax liability.
Presumably the provider should know if the plan was a qualifying one though and therefore should be able to answer the direct question "At the time of sale was my endowment a qualifying plan?" as this is factual and would seem to be a rather key piece of policy information [that should be retained by the provider].
This is on the assumption that being qualifying/non-qualifying was not dependent on the circumstances of the intended policyholder.0 -
If I may ask please? What were/are your monthly payments for the mentioned £60000 Endowment?0
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Monthly payments are £161.
Requested another surrender value looking to close it down.0 -
Before surrendering it, it would be worthwhile checking the traded endowment market to see if someone will buy it off you at a higher rate.
As it is with profits, this may well be the case.0 -
Hi Guys,
I have been going through my paperwork again and all the information I could find was that my policy was a "Fund Managed "policy.
I have no idea if this makes the policy a qualifying or non- qualifying policy.
I will have to give them another call tomorrow but for some reason I keep getting the same chap who cant tell me anything.0 -
The provider should be able to state whether the policy was qualifying under the Income and Corporation Taxes Act (ICTA) 1988 Schedule 15 - this is information that is factual and thus does not constitute advice.
Since your policy term (at inception) was over 10 years and you have made the same (?) monthly payment so far it is extremely likely this is a qualifying policy.
Should this individual you are talking to refuse to answer this question (or claim (s)he is unable to) then ask how you raise a complaint. Be polite but firm that you definitely wish to raise a complaint and will require a deadlock letter from them should they subsequently fail to provide an answer and you will then raise the matter with the Financial Ombudsmen Service (FOS).
This is not a hard question to answer! It would be very poor of them to refuse to do so.0 -
TrickyDicky101 wrote: »The provider should be able to state whether the policy was qualifying under the Income and Corporation Taxes Act (ICTA) 1988 Schedule 15 - this is information that is factual and thus does not constitute advice.
Since your policy term (at inception) was over 10 years and you have made the same (?) monthly payment so far it is extremely likely this is a qualifying policy.
Should this individual you are talking to refuse to answer this question (or claim (s)he is unable to) then ask how you raise a complaint. Be polite but firm that you definitely wish to raise a complaint and will require a deadlock letter from them should they subsequently fail to provide an answer and you will then raise the matter with the Financial Ombudsmen Service (FOS).
This is not a hard question to answer! It would be very poor of them to refuse to do so.
The original payment was £106 but in order to keep it on track it was raised to £161 to keep it on track.0 -
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