Tax And Endowment Policies
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Endowment policies are very common nowadays as more people have become aware of them and therefore more people have them. However, there are still aspects of the policies hat confuse people because it can be hard to find the information that you are looking for. The internet is a great source but with billions of websites competing against each other all the time it can be difficult to find the information you need. So many times people have to go through dozens of websites before they can actually find the information that they need.
One of the topics regarding endowment policies that frequently confuses many people is the tax implications of them. Traded endowment policies fall into two categories; they are either qualifying or non- qualifying for UK taxation purposes. Generally, the majority of them are qualifying but it is still important to find out about this.
With regards to qualifying endowment policies, they are subjected to capital gains tax on maturity, at a death claim or if you resell it. This tax is calculated by deducting the purchase price and premiums paid from the proceeds that have been received. This gain is then tapered depending on the number of complete years that the policy has been held. There are different rates depending on when your policy was bought so it is important to research this information.
Tax rates are different for non - qualifying endowment policies which aren't as common as qualifying policies. On maturity, at a death claim or via resale by UK tax payers the gain arising is potentially subject to income tax but only for higher rate tax payers. However, this is subject to 'top slicing' relief if the policy is owned by an individual investor or trustee.
There are many different companies who can help you work out how endowment policies are affected by tax so you don't have to try to work it out all on your own. It does seem very complicated and daunting to even work out whether you have qualifying or non - qualifying endowment policies.
For this reason it is advisable to speak to professionals who can help you. There are various different people who can do this for you from tax specialists to companies who sell and buy endowment policies. Once you have acquired this information though you will never have to go through the same process again so you can sit back and relax.
Article Source: Articlelogy.com
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