Endowment policy

CathA

Quick question- if I cash in an endowment policy, (before it's maturity date) or sell it on to a third party, is the payment I receive taxable? Thanks.

kingstreet

Two issues influence this.

First, is it a qualifying policy? If it is, it is likely there will be no liability at all as you are likely to have passed the point in the life of the policy where it could change.

If it isn't a qualifying policy basic rate tax will be deemed to have been paid by the fund so additional tax would be payable if you are, or if the gain would take you into the higher or additional tax bracket.

You will need to establish the qualifying status with the provider.

TrickyDicky101

Also, what kind of endowment policy is it - if it is Unit Linked then you won't be able to sell it as a TEP. I'm not sure if there is a market any longer for TEPs so you may be limited to surrendering your policy with the provider.

CathA

Thanks for that. Not sure what a qualifying policy is, although when I spoke to the insurance company one of the options they gave me was to sell it on to a third party, can't remember the name of the company they told me to ring? Paperwork is elsewhere at the mo.
I'm in receipt of a small pension and part time wages that keep me just under the tax bracket of £11000 ish. I'm 56 if that helps?
How do I tell if it's a qualifying policy please? And thanks again

TrickyDicky101

What's the value of the policy? If it is less than £33k ish then you won't need to worry at all about it being qualifying or not given your income.

CathA

It's an Increasing Premium Endowment, surrender value of approximately £11,000. It's got about another 10 years to run, been in place about 26 years?

sandsy

Are the premiums still being paid?

CathA

sandsy wrote: »

Are the premiums still being paid?

Yes they are. I've not decided what to do with it, so keeping on paying it seems a sensible idea.