Is tax payable on an Endowment policy?

Julian24110

Please excuse my ignorance here

A "unit linked endowment assurance policy" that I took out 20 years ago is due to mature next month. It is not linked to any mortgage it was just taken out as a savings vehicle.

The amount payable is quoted as a gross amount, does this imply that tax is payable on some part of the amount?

If so:

Is this on the whole amount or just on any profit made?

I am a higher rate tax payer so would it make any difference (or be legal) if I get the proceeds paid into my wife's account as she does not earn enough to pay income tax on her monthly income. The policy is held in joint names

Thanks

Julian

opinions4u

There should be no further tax payable (the life assurance fund has already discharged the tax liability).

There are exceptions to that rule, but unless you've made amendments to your policy you'll be fine.

holly_hobby

Not as long as it remains a qualifying policy, which is the basis under which all low cost (mortgage) endowment policies were written.

Qualifying rules can be complex, (very) basic requirements to maintain qualifying tax status are, a min written term of 10 yrs, with prems paid for at least 75% of the scheduled policy term.

Which as your written (and fully maintained) policy term was 20 yrs, and will be paying out on scheduled maturity - it has maintained its qualifying status, and you've no tax liability on the proceeds - regardless of your tax status.

Hope this helps

Holly