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Ask Your Own Question, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 5141
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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I have a single premium non qualifying whole life unit linked

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I have a single premium non qualifying whole life unit linked policy. Start date 21/5/1982.Total investment £2500.Current cash in value £22,000. Would I be liable for capital gains tax if I partially surrendered £11000?
Hello and welcome to the site. Thank you for your question.

Your partial surrender would not be chargeable to Capital gains tax.

The rules for partial surrender are that you are allowed to withdraw up to 5% of the original premium without paying any tax. At the end of each policy year the withdrawals in the year are compared to the available cumulative 5% allowances and any excess creates a chargeable event gain and may be subject to income tax.

You chargeable gain is (11,000-2,500) = 8,500.

A basic rate tax payer will not pay any additional income tax unless the size of the gain when added to the other income for the tax year brings one within the higher-rate tax band.

More on this can be found here - look at example 3 - partial surrender

I hope this is helpful and answers your question.

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