Tax due on UK Endowment policy?

R

riannchen

Guest
I just cashed in early my UK endowment policy (started in 1987) which was worth £28k based on paying in £15k. What tax do I need to pay - is the tax levied on the difference between the encashment value and the amount paid in? Or do I need to pay tax on the total sum?
 
Was any UK tax deducted at source on encashment or within the fund along the way or was the fund paid out gross? It may be that you can get a credit for any tax already paid to the UK authorities.

Not sure if it's normal gross roll-up unit linked funds maturity tax on growth of 23%, or income tax at your marginal rate or CGT applies here.
 
I understand that as it is a foreign life policy, all gains since March 2001 are taxable at 40% !

I had one that I took out years ago, when I was living in the UK. I assumed that it would be taxed at 23% as similar policies but on investigation, I was told that no, as a foreign policy, it is taxed at 40% on all gains since 2001. Yipes, I cashed it in ASAP and luckily(?) Mar 2001 was a high point - it had gone down a lot since then and has only just receovered to the 2001 valuation - it still was a good investment ( the 90s were fine) but no point in keeping it if future gains are being taxed at 40%
 
Indeed - according to [broken link removed]:
Rate of CGT

The standard rate of CGT is 20%. Exceptionally, a rate of 40%
applies on disposals of certain foreign life assurance policies and units
in offshore funds.
Click to expand...
 
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