Mature endowment policy

derby111

Someone recently told me that if I don't use my matured endowment mortgage policy to pay the mortgage off I could be liable for capital gains tax. Does anyone know if this is true or where I can find the information on this issue?

Annisele

It's not true. I'm afraid I can't give you a link for that; it's rather difficult to prove a negative. If you're worried, write to your endowment company and ask them - they'll know what kind of policy you have, and have all of the relevant information regarding gains etc.

If you had to pay any kind of tax on the proceeds of your endowment policy, it would be income tax and not capital gains tax - and even then, your decision as to how to use the proceeds would have nothing to do with whether or not those proceeds were taxable.

If your endowment policy was "non-qualifying for tax purposes" at outset (which is very unlikely), or became so later on (which is possible), then you might have to pay income tax at maturity. If your endowment company sent you anything labelled "chargeable event" or "chargeable gain", then you might have to pay some tax. The sorts of things that might cause your policy to become non-qualifying are major changes within the last ten years of its life.