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About to sell my 2 endowments. Will use the £30k to pay off my mortgage. Will I have to pay tax on the endowment money? Thanks for any help.

CaroleB33
by CaroleB33 06 October 2009  |  Comments 4 comments  |  Love Love  0 loves

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Comments (4)

  • manzanilla
    Love rating 414
    manzanilla posted

    How long have you had the endowment? If you have had it more than 10 years, (or more than 3/4 of the term of the policy if that would be less than 10 years) then there should be no tax to pay.

    If you are selling after less than 10 years, then if you are a basic rate tax payer, there will be no tax to pay.

    If you are selling after less than 10 years and you are a higher rate tax payer, then you will have to pay income tax at 18% (the difference between hugher and basic rate tax) on the gain on the policy.

    (This assumes your endowment is a normal qualifying endowment. You would know if ou didn't have one of these!)

    manzanilla

    Posted on 06 October 2009 | Love Love  2 loves Report
  • CaroleB33
    Love rating 0
    CaroleB33 posted

    Hi,

    Thanks so much for the help. Both endowments are more than 10 years old. I'm not sure there will be much gain on the policies. My husband pays basic rate and I'm a higher rate tax payer. The endowments are in both our names.  Your help has eased a few concerns I had. 

    Thanks for the info.

    Posted on 07 October 2009 | Love Love  0 loves Report
  • MikeGG1
    Love rating 881
    MikeGG1 posted

    Be careful not to incur redemption charges. There may well be a maximum that you can overpay each year without incurring penalties. It may be better to make payments over a period rather than one lump.

    Mike

    Posted on 07 October 2009 | Love Love  0 loves Report
  • CaroleB33
    Love rating 0
    CaroleB33 posted

    Thanks for the advice. We are fine with our mortgage ... checked the fine print re redemption charges. But if they try to pull a fast one will do the staged payments thing.

    Carole

    Posted on 07 October 2009 | Love Love  0 loves Report

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