Tax on endowment payout

MYDOGCRYSTAL

hi
does anyone know if an old endowment policy that was over 10 years old which ceased to be paid any further and not used to pay a mortgage(they found us and said it could be cashed in as not against a mortgage anymore), anyway would this be classed as other income for a tax year for tax credits purposes or just the interest if it was over £300 in one year, dont want to do the wrong thing again, the system is so complicated who knows what you should be doing

thanks

ceeforcat

dunstonh - that is as good an explanation of the complexities of chargeable events as I have seen - now filed away in an important place within my office. Excellent.

maninthestreet

This thread is 5 years old - why recycle it???

whatatwit

MYDOGCRYSTAL wrote: »

hi
does anyone know if an old endowment policy that was over 10 years old which ceased to be paid any further and not used to pay a mortgage(they found us and said it could be cashed in as not against a mortgage anymore), anyway would this be classed as other income for a tax year for tax credits purposes or just the interest if it was over £300 in one year, dont want to do the wrong thing again, the system is so complicated who knows what you should be doing

thanks

Hi, I think you may get more information if you start a new thread, especially as tax rules change and some of the info given to the original poster may no longer apply.
I also think as your question involves tax credits, it may be better for it to be in the benefits part of the board, rather than income tax.

dunstonh

investments in life funds (such as endowments and investment bonds) are not included in the means tests whilst they remain in the product (exception being if you took out an investment bond for the sole purpose of it not being included in the means test - that is deprivation of assets).

If you surrender the plan, the proceeds payable then become assets/savings that you have to declare. If the plan matures, you have 30 days to roll it over into an investment bond for it to remain exempt.

thedaddy74

Please help!

We cashed in two Standard Life endowment policies after about 12 years of paying in. The total amounts received are £14,000.

We understand that as a standard rate tax payers we will have already paid income tax on the interest as it was accumlated (is this correct?) and therefore the money does not have to be declared as income to the HMRC?

The main query we have is- how much of this £14K do we have to declare on our Tax Credits form as "other income"? We've assumed that it's not all classed as "income" as an endowment is basically just a savings account. Is it just the interest? If so, the interest for which year? Where do we get that information from?

Sorry for the log post, not too sure what we're on about.

Any help would be appreciated as we're begining to wish we'd just left it alone!

Thanks