Cashing in my endowment

nickinoo

We have been paying £62 per month into an endowment since Oct/Nov 96.

As we are moving house & taking out a larger, repayment mortgage for a new property we have decided to cash our endowment in as the money will pay for the new fixtures & fittings we want plus it will give us a little bit for a rainy day.

I enquired as to the redemption value back in April & was told £6479, when I rang today this has gone down to £6400 even though we have made another payment. I know investments can go up as well as down etc, etc but I'm assuming this means it's not performing well?

Also does anyone know if I will have to pay tax on this amount?

dunstonh

but I'm assuming this means it's not performing well?

No. That is an incorrect assumption. Just the frequent May wobble on the markets. Most medium risk portfolios are down 5%-10%.

Also does anyone know if I will have to pay tax on this amount?

If you are a higher rate taxpayer or borderline, then potentially you will have to pay additional tax as surrender at this point in the contract life would be a chargeable event.

nickinoo

dunstonh wrote:

No. That is an incorrect assumption. Just the frequent May wobble on the markets. Most medium risk portfolios are down 5%-10%.



If you are a higher rate taxpayer or borderline, then potentially you will have to pay additional tax as surrender at this point in the contract life would be a chargeable event.

I think my hubby is just on the threshold for higher rate tax (is it 30K?). I pay tax at the ordinary rate but as the policy is in joint names I don't suppose this matters?When would we be able to get the money tax free?

missile

dunstonh wrote:

If you are a higher rate taxpayer or borderline, then potentially you will have to pay additional tax as surrender at this point in the contract life would be a chargeable event.

I think it is treated a capital gain? In which case it would only be taxed if you have exceeded capital gain allowance for this tax year.

EdInvestor

Should be OK after 10 years.You have to make a gain in order for tax to apply of course.

nickinoo

missile wrote:

I think it is treated a capital gain? In which case it would only be taxed if you have exceeded capital gain allowance for this tax year.

That's what I assumed to be honest & as that's the only investment income we'll have this year then we should be Ok with 6.5k I would think.

EdInvestor wrote:

Should be OK after 10 years.You have to make a gain in order for tax to apply of course.

So assuming I make a loss (I am getting around £700 less back than I put in) I should be OK. I

think I will have to brave ringing the tax office again-grr!