Thanks all - my policies have been running for 21 years - so no tax

I have sent them to APMM to see if they can improve on the offer from Phoenix

Most endowment policies are subject to special tax rules known as the ‘Qualifying Rules’. Under these rules if premiums have been paid to the policy for a period of 10 years or more, then any ‘gains’ you make from the policy are free of tax.

The ‘gain’ made in a policy is the difference between the amount you receive from the sale of your policy and the total premiums paid since the policy’s start.

Where a policy has been running for less than 10 years and has not been maintained for a period greater than 75% of its original term, there is the possibility that any ‘gains’ made within the policy could be subject to tax. If you fall into this category you should seek advice on the taxation position.

affinity:

Rather worrying someone in the industry "Can't remember off the top of my head" regarding the FSCS, as this is one of the main questions clients are asking?

The Scheme covers all deposits; if a high street bank went into administration, for example, consumers who have deposit accounts with the bank would be entitled to compensation through the FSCS. Most insurance policies are covered, as well as insurance advice and arrangement. All investment business is covered by the scheme, as is mortgage advice and arrangement.

not sure why I posted that, must had a funny 5 minutes! edited now, obviously!

Brian

Provided an endowment runs for at least 10 years, it is regarded by the taxman as a "qualifying policy" policy. What this means is, an endowment that runs for at least 10 years and qualifies for a tax-free payout at the end of the term. However…

Endowments, qualifying or not, are not tax-free. The proceeds of an endowment are free of all taxes. The proceeds are, however the growth of the policy has been taxed throughout its life. Therefore it's more accurate to say that the proceeds of endowments are free of any further tax liability on your part. The tax man has already charged. The life assurance company pays tax on the investment growth in two ways. First of all it pays tax at 22% on the capital gain of the assets of the fund, in other words the growth in value of the shares etc. Secondly it pays 20% tax on income, this would come from the share dividends etc.

The actual tax paid is less however, because the insurance companies are allowed to offset certain expenses against the tax bill, in effect reducing it. For lower rate tax payers any tax paid within the fund is not refundable, this means that lower rate payers would end up paying tax they wouldn't have normally been liable to. Standard rate payers simply would be paying the equivalent tax they would of paid on alternative investments.

What about the tax question ?

Rather worrying someone in the industry "Can't remember off the top of my head" regarding the FSCS, as this is one of the main questions clients are asking?

The Scheme covers all deposits; if a high street bank went into administration, for example, consumers who have deposit accounts with the bank would be entitled to compensation through the FSCS. Most insurance policies are covered, as well as insurance advice and arrangement. All investment business is covered by the scheme, as is mortgage advice and arrangement.

If they try to tax me on my profits - I will be laughing - since I have actually lost money (both in real terms and any other terms that you can come up with) - hence NEGATIVE tax - so the government will end up giving me a tax rebate ?

Don't forget you could be liable for tax for early surrender!

Brian

Although I am probably cashing it in shortly - Is my endowment payout protected under the government protection scheme ?