Tax due on UK Endowment policy?

[riannchen]

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?

 

[ClubMan]

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.

 

[jpd]

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%

 

[ClubMan]

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.