endowment not used for mortgage

foxy1960

hello, can someone tell me if i pay off my mortgage off before my endowment policy matures is there tax to pay on the money i receive from my endowment policy as it is not being used to pay off mortgage , many thanks

opinions4u

No tax to pay.

stevepett

opinions4u wrote: »

No tax to pay.

I am a bit rusty on this - being an IFA is rather akin to being a paper pusher rather than an family adviser these days, so I stopped giving advice several years ago, however:

The answer is probably correct - but not necessarily!
Some endowment policies are not what is called "qualifying life policies" and these are technically taxable on surrender or maturity.
The profits are divided by the number of years the policy has been going, and if the resulting figure pushes you into higher rate tax, then there will be tax to pay.

Even if the endowment is a qualifying policy ( and almost all are) they have to run for (I think) two thirds of their term or a minimum of 10 years before becoming tax free.

If you do have an IFA, cherish him or her so there might be one more left after the Financial Services Authority succeeds in its attempts to restrict genuine Independent Advice to the rich and throw anyone who needs to read these columns to the tender mercies of the banks, unrestrained by need to sell stuff through IFAs any more.

Result -
1) NO ADVICE on old policies as the banks won't understand them
2) The guarantee of rip off prices from banks when they realise they can charge what they like without fear of IFAs blowing the whistle.

Sorry - I feel really strongly about the silly folk at the FSA and their very strange ideas, which certainly won't help members. Especially the 46% of you who won't ever be able to get another mortgage if the highly intelligent FSA have their way!