Tax on Life Assurance Unit Trusts?

BlueVinney

I have a life assurance policy which is linked to Unit Trusts where interest is re-invested. I receive statements from the Policy issuer which show the amount re-invested, units bought etc, without any mention of income tax. It is not labelled as a tax statement.

Is this interest taxable?

dunstonh

You are unlikely to be invested in unit trusts as the ability to use unit trusts within other tax wrappers is a relatively new thing. Its most likely to be invested in unit linked life funds. Although the end result for taxation is the same.

The income within the life assurance tax wrapper has basic rate of tax taken care of at source. Only higher rate taxpayers "could" face a liability but there are ways for them to avoid it as well. Indeed, the life fund taxwrapper is a very common product for higher rate taxpayers to use as they can be more tax efficient than unit trusts.

Also, it isnt interest unless you are invested in cash funds. Its income distribution which is more likely to have come from shares held within the fund.

Capital gains tax is also taken care of within the investments as fund manager level so there is no personal liability for CGT either.