Hi. My name is*****'m looking at your question now and will post my answer or ask for more information here in a short while.
Recipients of gifts are not taxable on them in the UK.
Assuming that you are not the named beneficiary of the life policy, then I cannot see how you can be liable to UK tax on what would be called a "chargeable event gain" in the UK as it would not be yours for UK tax purposes. If you parents are simply making monthly withdrawals from the life policy of which they are the mutual named beneficiaries and then passing that cash to you, then you have no need to report the gifts to HMRC in the UK. However, you should keep a record of the gifts so that you can prove where the money came from if you are asked.
If you are the named beneficiary of the life policy, then you may have tax to pay in the UK on the annual gains if there are any. I would need detailed information on the life policy and the cash withdrawals to be able to have any chance of making a judgement about your UK tax position.
I hope this helps but let me know if you have any further questions.
Can you tell me which country this policy was issued in please.
With a UK policy or even an offshore one issued by a UK insurance company, there is only a taxable gain if the cash withdrawals in a policy year exceed 5% of the original investment. Any part of the 5% allowance not used in one year can be used in a later year. Therefore, if 5% of the original investment was withdrawn every year for 20 years, there will have been no taxable chargeable event gains. All the original investment will have been withdrawn and any subsequent withdrawals will be pure profit and will give rise to a chargeable event gain. Take a look at HS320 and HS321.
You may need to refer back to the Netherlands advisor to find out how the type of policy you are a beneficiary of works and how any income or gain is calculated. Normally, if income or a gain is taxable on the host country it will be taxable in a other country but it won't always be calculated in the same way.
When you know the nature of the payments you have been receiving, it will be easier to decide whether there is tax to be paid in the UK.