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bigduckontax
bigduckontax, Accountant
Category: Tax
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I am returning back to the u.k. what is the tax position on

Customer Question

I am returning back to the u.k. what is the tax position on life insurance policies
the life policy is held in luxemburg under french revenue where it is tax free.
Submitted: 3 years ago.
Category: Tax
Expert:  bigduckontax replied 3 years ago.

Hello, I'm Keith and happy to help you with your question. Life insurance products in the UK are usually outside the scope of tax. The pay out on death is, however, taken into account as part of your estate for Inheritance Tax (IT) purposes. You have to pass on with more than 325K for IT to kick in at 40% flat rate on the amount over the limit. If your spouse pre-deceases you and has any left over IT allowance it can pass to the surviving spouse giving a possible 650K exemption.

 

However, there may be some tax due on certain foreign life insurance policies and you should have a look at HMRC help sheet 321, which actually applies to tax year 12/13, but will give you the gist. It is exceedingly complicated and will take you a long time to assimilate. I have had a quick canter through and if your policy follows the norm for UK policies I don't think you will be affected. It's a read for the long, winter nights though!

 

I do hope I have pointed you in the right direction.