endowment advice please

[I hammer]

hi, i am thinking of surrendering my under-performing endowment to use as part deposit on my new flat.

However the info pack i have just received has advised me that i may be liable to pay tax on the surrender value.

I have calculated that i have made approx ?1200 profit, compared to premiums paid in over 13 yrs.

Do i need to pay tax...and how would i declare it?

I earn ?37500 pa.

Alternatively, the info pack has advised i could sell the endowment to a 3rd party, as i may get more than the surrender value. Is this a good idea? Is it easy? would i need to pay tax?

Many thanks for any advice please...

[womanofdulwich]

i cant help- I still have my endowment- but I don't like the idea that someone I dont know gets money on my death. I think its scary.

[Alan Medic]

Do only Drawing Room members have such policies?

[indiepanda]

I hammer Wrote:

-------------------------------------------------------

> hi, i am thinking of surrendering my

> under-performing endowment to use as part deposit

> on my new flat.

>

> However the info pack i have just received has

> advised me that i may be liable to pay tax on the

> surrender value.

> I have calculated that i have made approx ?1200

> profit, compared to premiums paid in over 13 yrs.

> Do i need to pay tax...and how would i declare

> it?

> I earn ?37500 pa.

>

> Alternatively, the info pack has advised i could

> sell the endowment to a 3rd party, as i may get

> more than the surrender value. Is this a good

> idea? Is it easy? would i need to pay tax?

> Many thanks for any advice please...

The market for traded endowments used to be quite lively but I don't think it is so much these days - I was thinking of surrendering mine too. The insurance companies used to get away with giving very penal surrender values which didn't reflect the value you would get leaving the policy with the company till maturity and letting it accumulate. But guidance these days means they are expected to pay not far off the asset share (i.e. the value of the reserve they are holding for their policy), meaning someone willing to buy and carry on your policy wouldn't pay much if any more than the insurer would give you.

However, still worth checking if you can get a free quote - see this site - they've been mentioned on the BBC and in the Sunday Times so hopefully sound, but I can't vouch for them myself. I don't know how the tax situation would work in this case. However, they do seem to search the market for the best deal for you which sounds good.

http://www.endowmentsurrenderplus.co.uk/

There's some info on the which? web site about the tax situation with some worked examples which should help you work out if tax would be due - try the section on qualifying or non-qualifying (it is if surrendering turns it into a non-qualifying policy you might have to pay tax) and then the next section on top slicing explains how the tax would be calculated.

http://www.which.co.uk/money/tax/guides/tax-on-savings-and-investments/life-insurance-investments/

[the carpet binder]

Hi, i have cashed in endowement policies and have never paid tax on them, the surrender values have been dropping badly over the last 6 months i check every other month what surrender values i am offered and my values are dropping at around ?2500 each 8 week period.