endowment maturing / tax credits

confused.sam

Wow. Tax credits are hard to figure, but right now it feels impossible.

I have an endowment policy linked to a paid mortgage from a previous house. i still have a mortgage that i am only paying interest on.

The endowment can't be paid direct to this mortgage as it wasn't linked, therefore it will be paid direct to me.

most of this endowment was paid before i had children and claimed tax credits. how much of the sum i receive do i have to declare to the tax credits. If i still had my old house i wouldn't need to declare any of it. as i wouldn't receive it. but now i have to put it in my bank then pay off some of my mortgage, so i have to declare some of it. it doesn't make any sense. can anyone help please, please and please again

paddedjohn

Not too sure it will make a difference but if you declare it all you will have covered yourself.

confused.sam

It could make a difference because the will reduce my tax credit at the rate of 41%. quite a lot of money

paddedjohn

Call them and ask, if you try and be clever with your figures now then you could end up gettin in lumber later on.

Sixer

You don't have to declare any capital to tax credits. You only need to declare interest paid to you on capital. And then only if it's more than £300 in a year.

You can do as you please with your endowment: it won't affect your claim to tax credits.

The proposed Universal Credit will have capital rules, but this is some way off and won't affect existing tax credit claims for several years, so not for worrying about now.

paddedjohn

But at the moment it's an investment, when it pays out will it not be income?

Anubis_2

The proposed Universal Credit will have capital rules, but this is some way off and won't affect existing tax credit claims for several years, so not for worrying about now.

So initially it will only affect new claims once UC comes in? Surely once UC comes in, and people renew their tax credits, the renewal forms will be adjusted to reflect capital to be declared?