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  • FIRST POST
    • Rapid64k
    • By Rapid64k 16th May 17, 10:27 PM
    • 2Posts
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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
    • 87,693 Posts
    • 52,919 Thanks
    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
    • 2 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
    • 2,557 Posts
    • 1,664 Thanks
    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
    • 0 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?
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