Is tax due on this money?

tea_leaf

I have a small account which I am in the process of surrendering. I took it out in 1999 and have paid in £30 per month ever since. The maturity date is November 2021, but I need the money now.

It was called a Regular Savings Plan Endowment Life Insurance Investment (yes really!), and is held with Scottish Widows.

I have bought what appears to be 20 sections and it seems to be a market linked endowment

Is this considered income for the purposes of tax, or could it be considered moving savings from one product to another? Is there another way I need to look at this?

There are no fees or charges levied by SW for ending the product early.

As far as I can see, I have around £7k value in my payments and around £2.8k in 'profit' if I cash it in now.

ffacoffipawb

tea_leaf wrote: »

I have a small account which I am in the process of surrendering. I took it out in 1999 and have paid in £30 per month ever since. The maturity date is November 2021, but I need the money now.

It was called a Regular Savings Plan Endowment Life Insurance Investment (yes really!), and is held with Scottish Widows.

I have bought what appears to be 20 sections and it seems to be a market linked endowment

Is this considered income for the purposes of tax, or could it be considered moving savings from one product to another? Is there another way I need to look at this?

There are no fees or charges levied by SW for ending the product early.

As far as I can see, I have around £7k value in my payments and around £2.8k in 'profit' if I cash it in now.

This was probably a "qualifying" endowment policy.

No tax is due on these if you cash them in after 10 years. As it is well over 10 years in your case, no tax is payable.

tea_leaf

Thank you ffacoffipawb. I have read about qualifying policies, but it was a bit gobbledegook to me!

That being the case, am I under any obligation to report the 'income' to the HMRC? I am a PAYE tax payer normally, on a standard tax code under £38k wages.

Malthusian

Assuming that's the case, then no.

tea_leaf

That sounds like a plan then, thank you! I've been struggling to work out who I should ask for advice on this!

Apodemus

You might want to check that this isn’t a policy that comes with a terminal bonus that you will be forfeiting by ending it early. After this length of time, it would be a shame to lose out for the sake of a couple more years.