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Endownment Policy! cash in? or NOT?

Endownment Policy! cash in? or NOT?

Old Apr 24th 2006, 10:17 am
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Default Endownment Policy! cash in? or NOT?

We have a couple of the old Endownment policy`s been running for 13 years now and was wondering how the tax man would affect us if we were to keep it running here the full term as a savings plan for the kids ( 12 years left to run)

At the moment the value ( cash in) sits around £12k but if we were to leave it full term we are looking at £50k........ Just looking at these figure we will still have to pay towards this another £15k if we let it run full term so if we put things together like.


Present cash in Value £12k
Payments to maturity £15k


What we get in 12 yrs £50k


We know about the dreaded shortfalls on these things but our yearly policy statements still show that we are looking at a £200 shortfall from the predicted payment when we started the policy

Now if i were to keep these running full term how would the Tax man affect what i would eventuall get back?



All opinions and advice welcome .........cash in? keep as savings plan?
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Old Apr 24th 2006, 10:43 am
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Default Re: Endownment Policy! cash in? or NOT?

Originally Posted by Sunny_Glesga
We have a couple of the old Endownment policy`s been running for 13 years now and was wondering how the tax man would affect us if we were to keep it running here the full term as a savings plan for the kids ( 12 years left to run)

At the moment the value ( cash in) sits around £12k but if we were to leave it full term we are looking at £50k........ Just looking at these figure we will still have to pay towards this another £15k if we let it run full term so if we put things together like.


Present cash in Value £12k
Payments to maturity £15k


What we get in 12 yrs £50k


We know about the dreaded shortfalls on these things but our yearly policy statements still show that we are looking at a £200 shortfall from the predicted payment when we started the policy

Now if i were to keep these running full term how would the Tax man affect what i would eventuall get back?



All opinions and advice welcome .........cash in? keep as savings plan?

I cashed mine in. Couldn't be bothered with the hassle to be honest, plus it gave us a nice boost to our Australia fund.

I'm not sure of the tax implications, but seen as ours was a high risk policy I thought it wasn't worth the trouble.

Plus you've got to think how much the £35k you'd make on it will be worth in 12 years time. £35k 12 years ago was a lot of money, but now it's not really that brilliant. So in another 12 years how much will you be able to get for that.

Another option is to take it now and put it in a high interest account or an ISA, at least then you are guaranteed to get a return on it.

I'll leave the tax experts to tell you the tax implications if you keep it.
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Old Apr 24th 2006, 10:46 am
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Default Re: Endownment Policy! cash in? or NOT?

Did someone mention , endowment
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Old Apr 24th 2006, 12:04 pm
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Default Re: Endownment Policy! cash in? or NOT?

The ATO consider any annual growth in an endowment policy as income and tax you accordingly.

In other words You will be taxed every year on the annual growth :scared:

Up to you to decide if it is worth keeping.

G
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Old Apr 24th 2006, 12:34 pm
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Default Re: Endownment Policy! cash in? or NOT?

Originally Posted by Grayling
The ATO consider any annual growth in an endowment policy as income and tax you accordingly.

In other words You will be taxed every year on the annual growth :scared:

Up to you to decide if it is worth keeping.

G
If it's anything like mine then will the ATO give me money?

Given the total lack of performance of my Standard Life fund - I'll wait until the demutualisation goes through, sell the shares and cash the whole lot in. Growth over the last 15 months has been 2%.
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Old Apr 24th 2006, 12:38 pm
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Default Re: Endownment Policy! cash in? or NOT?

We cashed our's in. It enabled us to book container and flights and hotels prior to completion on the house. Best thing we did, bar coming here of course
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Old Apr 24th 2006, 12:52 pm
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Default Re: Endownment Policy! cash in? or NOT?

I really think this is one area where professional advice is needed.

There are some tax free allowances but only up to a limited amount...go above that and you have to pay tax on the lot :scared:

G
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Old Apr 24th 2006, 1:25 pm
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Default Re: Endownment Policy! cash in? or NOT?

Hi- We have just asked for the latest value for our endowment and are pondering the same decision. One thing for sure is that you cant cash in and put in to a uk isa as you will no longer be a uk taxpayer. Do they have ISA's in OZ?

Darren
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Old Apr 24th 2006, 2:15 pm
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Default Re: Endownment Policy! cash in? or NOT?

I totally understand where your comming from but, you mentioned that it wont be a lot in another 12 years, this will be the case but my monthly payment will also look very little as when we first took out the policy £100 monthly sounded quite a bit but that amount now is something you would spend on a weekly basis if you go on a night out, Yes?

In the long run if i were to say invest this in Aus, in whatever way available over the next 12 years would it have as good a return after Tax than it would if i were to leave it here and keep up the payments and then allow the Taxman to take his chunk when due.............


Just one more little thing, this also cover me, ( well the kids and the OH) should anything hmmmmmgr should happen to me





Originally Posted by WendyC
I cashed mine in. Couldn't be bothered with the hassle to be honest, plus it gave us a nice boost to our Australia fund.

I'm not sure of the tax implications, but seen as ours was a high risk policy I thought it wasn't worth the trouble.

Plus you've got to think how much the £35k you'd make on it will be worth in 12 years time. £35k 12 years ago was a lot of money, but now it's not really that brilliant. So in another 12 years how much will you be able to get for that.

Another option is to take it now and put it in a high interest account or an ISA, at least then you are guaranteed to get a return on it.

I'll leave the tax experts to tell you the tax implications if you keep it.
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Old Apr 24th 2006, 2:19 pm
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Default Re: Endownment Policy! cash in? or NOT?

Originally Posted by Sunny_Glesga

In the long run if i were to say invest this in Aus, in whatever way available over the next 12 years would it have as good a return after Tax than it would if i were to leave it here and keep up the payments and then allow the Taxman to take his chunk when due.............

Problem is the taxman will want his chunk from you each year but you will not actually be recieving any cash. As endowments tend to grow more the longer you keep them the annual tax liability will also rise each year.

You really should consult a professional advisor.

G
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Old Apr 24th 2006, 2:20 pm
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Default Re: Endownment Policy! cash in? or NOT?

Originally Posted by Sunny_Glesga
I totally understand where your comming from but, you mentioned that it wont be a lot in another 12 years, this will be the case but my monthly payment will also look very little as when we first took out the policy £100 monthly sounded quite a bit but that amount now is something you would spend on a weekly basis if you go on a night out, Yes?

In the long run if i were to say invest this in Aus, in whatever way available over the next 12 years would it have as good a return after Tax than it would if i were to leave it here and keep up the payments and then allow the Taxman to take his chunk when due.............


Just one more little thing, this also cover me, ( well the kids and the OH) should anything hmmmmmgr should happen to me
Yes good points there.

I cashed mine in because it wasn't doing very well anyway. It was that bad, I couldn't even sell it !! No-one would touch it. So that kinda made my mind up straight away.

You should talk to a financial adviser and see what they say. They could give you facts and figures, then you can decide properly if it's worth keeping or if it would be better to invest it elsewhere.
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Old Apr 24th 2006, 2:41 pm
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Default Re: Endownment Policy! cash in? or NOT?

Originally Posted by Darren S
Hi- We have just asked for the latest value for our endowment and are pondering the same decision. One thing for sure is that you cant cash in and put in to a uk isa as you will no longer be a uk taxpayer. Do they have ISA's in OZ?

Darren
If you were considering a cash ISA - then you'd be getting any interest earnt in the UK free of tax anyway because you'll be a non UK tax payer. You will of course incurr a liability in Oz on any tax earnt as your worldwide income is asessed.
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Old Apr 24th 2006, 2:45 pm
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Default Re: Endownment Policy! cash in? or NOT?

Originally Posted by Sunny_Glesga
We have a couple of the old Endownment policy`s been running for 13 years now and was wondering how the tax man would affect us if we were to keep it running here the full term as a savings plan for the kids ( 12 years left to run)

At the moment the value ( cash in) sits around £12k but if we were to leave it full term we are looking at £50k........ Just looking at these figure we will still have to pay towards this another £15k if we let it run full term so if we put things together like.


Present cash in Value £12k
Payments to maturity £15k


What we get in 12 yrs £50k


We know about the dreaded shortfalls on these things but our yearly policy statements still show that we are looking at a £200 shortfall from the predicted payment when we started the policy

Now if i were to keep these running full term how would the Tax man affect what i would eventuall get back?



All opinions and advice welcome .........cash in? keep as savings plan?
Leeanne, don't know about the tax thing but we cashed our endowment policy in as we had a short fall of £16,000! We just about got back what we paid in. Its going to good use, its paid for our visa application and will pay for our reccie too! By the way the DHL man came early.....tis gone now my application! :scared:

Jackie x
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Old Apr 24th 2006, 4:54 pm
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Default Re: Endownment Policy! cash in? or NOT?

Well Jackie, what happened then was it a smile and a great relief or did the tears flow

Anyway, have a nice relaxing night with a few glasses and wait til tomorrow before you start checking you mail for any replies


lets hope its not too long eh! We shouldnt be too far behind :scared:






Originally Posted by Mrs JFW
Leeanne, don't know about the tax thing but we cashed our endowment policy in as we had a short fall of £16,000! We just about got back what we paid in. Its going to good use, its paid for our visa application and will pay for our reccie too! By the way the DHL man came early.....tis gone now my application! :scared:

Jackie x
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Old Apr 24th 2006, 5:12 pm
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Default Re: Endownment Policy! cash in? or NOT?

Originally Posted by Sunny_Glesga
Well Jackie, what happened then was it a smile and a great relief or did the tears flow

Anyway, have a nice relaxing night with a few glasses and wait til tomorrow before you start checking you mail for any replies


lets hope its not too long eh! We shouldnt be too far behind :scared:
He arrived early and I wasn't expecting it. had palpitations for about an hour after. ! will have a few glasses tomorrow night as I am working again tonight!

Good luck with yours too Leeanne!
jackie x
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