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bigduckontax, Accountant
Category: Tax
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What are the tax rules in withdrawals from Single premium

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What are the tax rules in withdrawals from Single premium Whole Life Policies?

Hello, I am one of the experts on Just Answer, and pleased to be able to help you with your question.

Did you make any gain as a result of this withdrawal?

Customer: replied 1 month ago.
no

Then there is no gain to declare. That is normal with most life assurance policies.

I do hope that you have found my reply of assistance.

Customer: replied 1 month ago.
If the answer were yes what would be the considerations?

The gain might me taxable, but you can withdraw up to 5% per annum without penalty anyway.

When was this policy taken out by the way?

Customer: replied 1 month ago.
1902
Customer: replied 1 month ago.
Sorry 1990

Providing that your withdrawals do not exceed the 5% per annum rule (cumulative) then there is no gain. Over that, it is taxed under the Capital Gains Tax (CGT) regime at 10% or 20% or a combination of the two rates depending on your income including the gain in the tax year of withdrawal. You have a non cumulative Annual Exempt Amount (AEA) of 11.3K, to offset any gain.

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Thank you for your excellent support.