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bigduckontax, Accountant
Category: Tax
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I started an endowment mortgage in 1988 and stopped paying

Customer Question

I started an endowment mortgage in 1988 and stopped paying into it in 2003 and left it dormant. The policy matured in December 2013 and I received what had accumulated in the account. No I have to undertake a yearly tax self assessment. Am I obliged to declare the money received as part of my income for self assessment.
Submitted: 3 years ago.
Category: Tax
Expert:  bigduckontax replied 3 years ago.
Hello, I'm Keith and happy to help you with your question.

Not normally, nearly all endowment policies paying out on maturity are tax free. The rules are:

It must be a qualifying policy, see rules below.

It must run for 10 years at outset [it does].

It must run for at least 75% of its term [it did].

Premiums must not more than double or halve in the period [ie change,stopping paying premiums is irrelevant in this context].

This policy appears to comply with the requirements. You make no declaration whatsoever on your self assessment return on maturity. The pay out is not classed as income. Emulate Brer Fox 'For he lay low and say nuffin!'

bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4191
Experience: FCCA FCMA CGMA ACIS
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Expert:  bigduckontax replied 3 years ago.
Thank you for your support.
Expert:  Sam replied 3 years ago.
Hi Whilst its probably nothing to worry about when in 2003 did you stop payments, because if this change came about less than 10 years before the final maturity date (and it matured in Dec 2013 so any month prior to Dec 2013 will affect this) then you may find you are liable to tax on the pay out. Do check with the company who held you policy for clarification.Thanks