i have just secured my PR and will be moving my family over to canada next year.
now i have 3 endowments running with around 6 years left to pay out.
i really dont think its an option of sending the money back over to the UK to keep them running to end of their term,which is a bloody shame for how much they will be 'worth'.

i am not after sound financial advise but other peoples experiences of what they have done when in the same situation as me.
i am not aware if i can transfer the funds over here etc.

anyone else been in the same boat???

I am facing the same question. This is my analysis:

Reasons to keep endowments running:
- Most of the benefit lies in the terminal bonus
- Now is a bad time to surrender a unit-linked endowment

Reasons to cash in:
- I believe the gains are tax-free in UK but not in Canada. If kept running, Canadian tax payable on gains from date of tax residency until maturity - could be exaggerated by low current valuation of unit-linked policies.
- Probably not going to make much profit anyway - throwing good money after bad
- Might get a good deal by selling rather than surrendering

So it's a question of balancing future Canadian capital gains tax against future (and uncertain) terminal bonus expectation. I have decided to keep mine running for the time being, just because now is such a terrible time to liquidate any investment linked to stock markets.

But if it's not practical for you to keep paying the premiums in UK then you have no option!

If they are unit linked endowments, there is no terminal bonus. If they are with profits, they would have. Normally.

Unit linked - cash in anytime you like.
With Profits, 6 years left on say 20/25 year endowment - keep them going.

In general.

If you do this, in light of the terminal bonus, expect to have to lose a fair chunk to capital gains tax in Canada

And of course it's worth considering how you would otherwise invest the endowment premiums. Canada is introducing a tax-free savings scheme (a bit like the ISA) next year.

We're in a similar situation, we will have 5 years left on 2 endowments, but keen to get the bonuses that Norwich Union are giving out over the next 2-3 years- I feel I'm owed them after they have plundered our endowments for their shareholders :curse:

Would we have to pay capital gains on the difference between when we move and when we get the money? What % is capital gains in Canada? I presume we would also have to check that Norwich Union would be happy to let us contine. We will be keeping a UK bank account anyway to pay life assurance, critical illness whichI know we can keep going.

With our Life and Critical illness cover you had to be a UK resisdent?

Charlie

I contacted ours and they have said it's ok to continue as long as it's paid from a UK bank account. Both said they have a lot of clients in Canada , Australia and New Zealand.

Yes.

There is no set rate. You add half of the capital gain to your taxable income for that year and pay tax at whatever marginal income tax rate applies.

If you know you have a capital gain coming in a future year you can talk to an accountant and work out a strategy to minimize the tax payable.

This thread is a bit of a shock to the system, I also have three endowments all maturing in about 6 years, which I presumed would be tax free!

I'm moving to Alberta summer next year, am I right in thinking that I will get back what I have paid in tax free, but any extra that I make I will pay tax on it,

please tell me I don't have to pay tax on the full amount?!

after reading all this my options now are to cash them in or sell them off
i aint going thru all the tax implications

6 years ago when we moved we were in the boat and had 3 endowments with 2 with 12 years to run and one with 7 years to run. We decided to keep them. We kept money in our UK bank account which was our 'back up' fund and over the next 4 years it paid our endowments. For the last two years we have sent money back. Next year the first one pays out and it will be paid directly into the UK bank account and will go towards paying the other two. Our understanding from our accountant is that we will not pay capital gains on it.

One of our reasonings for not moving them over or getting the money is we had then two sons then aged 7/9. Like most parents we want them to go to university and not be finanically cripped for it. Now the eldest one is 16 and we are looking at universities. The average fees are over $5000 per year each plus all the other stuff.

I have always felt secure that at least we have some money for the boys education if needed. We came over too late to start anything here.

In essence, how the UK tax authorities treat the capital gain is irrelevant for CRA's purposes.

An example is the best way to illustrate how much tax one will pay.

Let's say, at the time of becoming a resident for CRA's tax purposes the "fund" was valued at £20,000 but had 10 years left to run.

When it matured, it was worth £40,000 and a terminal bonus of £40,000 was applied. The total is now worth £80,000 which represents a capital gain of £60,000 since you became a tax resident in Canada. CRA would want you to pay tax on 50% of the £60,000 (£30,000) at whatever rate is applicable to you.

If you had any capital losses during the period that you could apply to reduce the amount of tax you will pay, these can be applied, but for people to say that "no tax is payable" is simply wrong.

The above means that you will also have to obtain a valuation of the asset at the time you became a resident of Canada for tax purposes.

My advice to anyone is to speak to tax advisors that are familiar with the tax rules of both Canada and the UK. Taking advice from members of a forum that have, likely, not instructed such professionals is a recipe for disaster.

Both of ours are with profit endowments, one of them predicted to fall short of the expected value , given what you say, it looks like it's worth keeping them on for the extra 5 years, even if we have to pay tax- although I'll look for a good accountant! How do you find out about terminal bonuses, can they tell me now if I ask?

Hi Almost,

I shall seek advice to my question, but in short, I too have an endowment "With Profits" I did consider selling this here in the UK and approached several companies and they all came flooding out the woodwork like cockroaches after a good meal.

I then discovered why all the interest was, with what they'd offered and what they had left to pay they were about to make lots more than me and I'd been paying for 14 years - bless them!

So I've decided to keep it going myself from an account in the UK. When this matures in the UK it will be Tax free or so I've been told by a financial advisor. Actually the same one who misold me the policy for what it's worth, so my question based on what you've said is this:

When it matures say 50k I would then have to declare this on my Canadian tax return as an income to which I could be taxed some 25% maybe, of the total pot - perhaps?

Would you say this is a fair assumption?

Thanks in anticipation

Y