Will I have to pay tax if I surrender my endowment ?

BlueSocks

Hello - I have a shortfall on my endowment so I was hoping to cash it in and use the proceeds and some savings to pay off my mortgage. I have had the endowment policy for 19 years with 6 years left to run. I have been quoted a surrender value of £17500 but the letter mentions that tax may be payable which I had not envisaged! I've looked online but cannot find any definitive answer but have resd that I may not need to pay tax if policy is over 10 years old. Can anyone help? Thank you!

kingstreet

If it's a qualifying policy, it's been in force long enough for there to be no liability to income tax on early surrender.

If it's non-qualifying, or was qualifying and an alteration made it non-qualifying, you might have a liability to higher rate income tax if you are a higher rate taxpayer.

Basic rate income tax and capital gains tax are paid on the returns on the investments within the fund.

theshed

I tried to start my own thread but without success, so hope this is ok.
I took out an Endowment with a company called MGM, which was transferred to Scottish Friendly some years ago. It was under-performing but I continued with it and made alternative arrangements when we moved.
By chance I recently came across the policy and find it was due in July 2016. Scottish Friendly tell me the business now belongs to 'The Mortgage Corporation'. From whom I await a reply.
But what I am wondering, is if I cash in now, with Brexit could the value have fallen since July ?
Any one know ?

kingstreet

That would depend on the medium - with profits or unit linked and the underlying investments.

Some assets have done well since June, others not so well.

AnotherJoe

theshed wrote: »

But what I am wondering, is if I cash in now, with Brexit could the value have fallen since July ?
Any one know ?

It "could" have. But its much more likely its risen.