Endownment advice please!

robbro

Hi everyone.


I would much appreciate some advice on my wife's endownment policy.


Background info. My wife took out the policy approx. 19 years ago with Aviva to pay off a portion of her mortgage which at the time was interest only £35000. (it still has 6 years to run) I did not know her at the time and her income could not stretch to the full repayment.


When we met I had just sold my house and we decided to pay off the interest only side of her mortgage but keep the endownment running for any future children to help them buy houses etc.


I work full time and my wife has been self employed for the least 2 years paying basic rate tax.


My question is as this policy will run its term (in 5 years time) will any payout (it will almost certainly not reach the £35000 it was supposed to) be taxable as income for her?


Secondly are there any problems with using the money for other purposes than it was originally intended. The policy is not linked to any mortgage company or house (that I know of).


Any advice would be greatly received.

dunstonh

My question is as this policy will run its term (in 5 years time) will any payout (it will almost certainly not reach the £35000 it was supposed to) be taxable as income for her?

No. Aviva issued qualifying plans so are not subject to tax on maturity

Secondly are there any problems with using the money for other purposes than it was originally intended. The policy is not linked to any mortgage company or house (that I know of).

No issues.

Although it may just be worth asking Aviva if the policy is assigned to a lender. The assignment would need to be removed if it is and the lender has to write to Aviva to confirm they have no interest in the policy. Doing that now saves a lot of effort at the time as young bank staff wouldn't know what endowments and assignments are. Many people actually make a complaint to the bank to get it done as its only the experienced staff that know what is needed.

Hopefully, Aviva will say it is not assigned.

robbro

Thank you Dunstonh for your quick and informative reply!


Looks like the kids may be able to buy a house in their lifetime now....unless Corbyn gets into power in which case we will all be living in a commune paying rent to the One State.