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Tax and Endowment surrender
widzee
Posts: 1 Newbie
Does anyone know if I would be liable to pay tax on an early surrender endowment policy? It a with-profits fund that was started inJan 1993 it is due to mature on Jan 2018. I have recently moved home and switched to a repayment mortgage (so no ned for endowment). The surrender value is roughly £12000. I am just over the 40% income tax bracket with my pay. My fear is that I cash it in, spend it on home improvement (which I need to do) and then I will get a tax demand asking me for £4800? please advise........
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Comments
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No Tax Liability I believe, assuming it was originally a "Qualifying policy" at outset, as it has now run more than 3/4 of the original term.0
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As Warwick says...
As a qualifying policy that has run 3/4 of the original intended term the beneficiary will not have a tax bill.I am a Mortgage Broker
You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0 -
I suspect it will be a qualifying policy.
If for some strange reason it isn't (eg GRE Freedom For Mortgage) the insurer will send you a chargeable event certificate on surrender and you would be liable for the higher rate liability only (basic rate tax paid within the fund).I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.0
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