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    • Rapid64k
    • By Rapid64k 16th May 17, 10:27 PM
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    Rapid64k
    Cashing in my Endowment
    • #1
    • 16th May 17, 10:27 PM
    Cashing in my Endowment 16th May 17 at 10:27 PM
    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.
Page 1
    • dunstonh
    • By dunstonh 16th May 17, 10:53 PM
    • 88,307 Posts
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    dunstonh
    • #2
    • 16th May 17, 10:53 PM
    • #2
    • 16th May 17, 10:53 PM
    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). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
    • Rapid64k
    • By Rapid64k 16th May 17, 11:40 PM
    • 9 Posts
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    Rapid64k
    • #3
    • 16th May 17, 11:40 PM
    • #3
    • 16th May 17, 11:40 PM
    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.
    • TrickyDicky101
    • By TrickyDicky101 17th May 17, 8:27 AM
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    TrickyDicky101
    • #4
    • 17th May 17, 8:27 AM
    • #4
    • 17th May 17, 8:27 AM
    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.

    ...

    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.
    Originally posted by dunstonh
    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.
    • Aran20
    • By Aran20 22nd May 17, 4:36 AM
    • 2 Posts
    • 1 Thanks
    Aran20
    • #5
    • 22nd May 17, 4:36 AM
    • #5
    • 22nd May 17, 4:36 AM
    If I may ask please? What were/are your monthly payments for the mentioned £60000 Endowment?
    • Rapid64k
    • By Rapid64k 11th Jul 17, 10:40 PM
    • 9 Posts
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    Rapid64k
    • #6
    • 11th Jul 17, 10:40 PM
    • #6
    • 11th Jul 17, 10:40 PM
    Monthly payments are £161.

    Requested another surrender value looking to close it down.
    Last edited by Rapid64k; 11-07-2017 at 10:42 PM.
    • timrowlands
    • By timrowlands 16th Jul 17, 1:39 PM
    • 3 Posts
    • 1 Thanks
    timrowlands
    • #7
    • 16th Jul 17, 1:39 PM
    • #7
    • 16th Jul 17, 1:39 PM
    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.
    • Rapid64k
    • By Rapid64k 18th Jul 17, 12:13 AM
    • 9 Posts
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    Rapid64k
    • #8
    • 18th Jul 17, 12:13 AM
    • #8
    • 18th Jul 17, 12:13 AM
    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.
    • TrickyDicky101
    • By TrickyDicky101 18th Jul 17, 8:59 AM
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    TrickyDicky101
    • #9
    • 18th Jul 17, 8:59 AM
    • #9
    • 18th Jul 17, 8:59 AM
    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.
    • Rapid64k
    • By Rapid64k 18th Jul 17, 9:05 AM
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    Rapid64k
    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.
    Originally posted by TrickyDicky101
    The original payment was £106 but in order to keep it on track it was raised to £161 to keep it on track.
    • TrickyDicky101
    • By TrickyDicky101 18th Jul 17, 9:22 AM
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    TrickyDicky101
    The original payment was £106 but in order to keep it on track it was raised to £161 to keep it on track.
    Originally posted by Rapid64k
    That's still within the terms of a qualifying policy so no need to worry on this point.
    • Rapid64k
    • By Rapid64k 18th Jul 17, 9:35 AM
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    Rapid64k
    Ok, just spoke the more knowledgeable person on the desk and it seems there was a change to my policy in 2009 I would presume this is when my premiums changed so I guess this will make policy non qualifying but as always they are unable to tell me how much the "charge" will be.
    Tax I presume.
    • TrickyDicky101
    • By TrickyDicky101 18th Jul 17, 10:40 AM
    • 2,626 Posts
    • 1,710 Thanks
    TrickyDicky101
    Ok, just spoke the more knowledgeable person on the desk and it seems there was a change to my policy in 2009 I would presume this is when my premiums changed so I guess this will make policy non qualifying but as always they are unable to tell me how much the "charge" will be.
    Tax I presume.
    Originally posted by Rapid64k
    Any changes to a policy to ensure the qualifying status is not impacted must be made on a plan anniversary and must be in accordance with the Terms and Conditions [of the policy].

    What or who instigated the change in 2009?

    What was the change (you mention premium increase but are you certain this was the change at this date point)?

    Did you take financial advice (eg from an IFA) before executing the change?

    Because a change to a qualifying status is potentially significant, it is important to be very clear on what, why, when and who instigated such a change.
    • Rapid64k
    • By Rapid64k 18th Jul 17, 10:51 AM
    • 9 Posts
    • 0 Thanks
    Rapid64k
    Hi,


    The policy was no longer on track so I had to increase my payments in 2009 to keep the policy on track.


    I did not seek any Financial advice.
    • TrickyDicky101
    • By TrickyDicky101 18th Jul 17, 11:48 AM
    • 2,626 Posts
    • 1,710 Thanks
    TrickyDicky101
    Did you increase the premiums from a plan anniversary or mid-year?

    Before you increased premiums did CountryWide caution you to seek independent advice or that there could be implications in increasing the payments?
    • Rapid64k
    • By Rapid64k 18th Jul 17, 12:01 PM
    • 9 Posts
    • 0 Thanks
    Rapid64k
    hi TrickyDicky,

    They said that they sent me a letter in February.

    I do remember receiving a letter advising me that the Endowment has a short fault so I had no choice but to up my payments.
    I do not remember been told that the increase in payments will affect my policy.
    The anniversary of the policy is in October.

    Getting complicated now.
    • Rapid64k
    • By Rapid64k 18th Jul 17, 3:12 PM
    • 9 Posts
    • 0 Thanks
    Rapid64k
    Ok spoke to the tax office, they said that the calculations will be done by Counrtywide.

    I think they can only tax the gain that was made not the money paid in to the account by myself.
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