Cook_County

That's only because no-one else has ever reached the same conclusion as you have. Would you recommend the lawyer who drafted the opinion for you? Have you asked him or her?

nun

Sorry, but an endowment policy and an annuity are totally different.

You might want to avoid PFIC etc etc, but we are just pointing out our concerns about doing that.

I don't know if UK tax is withheld at source on a non-qualifying endowment policy.

Neillc37

Let me tell you the background. I had hired a tax lawyer for another issue. He recommended a CPA for me to do the tax prep part of the issue. That CPA expected my wife's endowment mortgage to be problematic. I told him it was a life insurance contract and I thought there was a chance it would be tax deferred in the US. He said that since it was not constructed specifically for this purpose (life insurance is used as vehicle to protect assets from PFIC rules and hence I guess the tax on foreign life insurance premiums) there was very little chance. I was aggressive and asked him to get an expert opinion to be sure. Analysis was not cheap but it came back as a two page document with detailed analysts of the structure of the policy. The conclusion was that it conformed. My CPA said that it was then settled. It was tax deferred. Note the decision is very plan specific. Note also we didn't shop around. I just accepted a CPA's expert who didn't think it would be tax deferred.
The guys name is Nolan Miller of Qualified Plans SETX. I never spoke to him. This was in 2012.
Later my tax lawyer asked about this account. I told him the finding. He asked if I had it in writing. I did so he said it was OK.
As part of the other issue our position was audited by the IRS. They accepted the position.
I don't see how this expert would know anything about if the UK has a withholding tax. I don't want to spend any more money on it anyway. Maybe you meant if it's an annuity as far as the tax treaty is concerned? I don't really care about this position as either way it will end up the same for me via the foreign tax credit.
I just want to remove an unknown by finding out if the UK will take tax from me when they give me the cash.

nun

The best place to find the withholding answer is from the insurance company.....if they won't talk to you maybe a UK accountant could help.

As far as the tax treaty treatment is concerned my best guess is that the payout is covered under "Other Income". So UK get's to tax it and then you claim a FTC on your US taxes.