Tax on Life insurance cash in?

[Rollin]

I am currently selling a property for which I have a life insurance plan that has a cash in value.
It's a nice surprise, but I'm wondering if you generally have to pay tax on these payments?
Does it depend on the policy type? It's a Zurich Lifestyle Plus Plan.

[martinbiz]

Rollin said:

I am currently selling a property for which I have a life insurance plan that has a cash in value.
It's a nice surprise, but I'm wondering if you generally have to pay tax on these payments?
Does it depend on the policy type? It's a Zurich Lifestyle Plus Plan.

If it's doing well why not carry on with it if you don't need the cash? But to answer your question, no it's not directly subject to income tax, but when you die it would still form part of your estate like any other asset, so a possible inhertance tax liability

[Eric Mc]

You would need to check on the terms and conditions associated with the policy. Cashing in an insurance policy can lead to what are known as Chargeable Events - which ARE subject to Income Tax *(not Capital Gains Tax).

[Rollin]

martinbiz said:

Rollin said:

I am currently selling a property for which I have a life insurance plan that has a cash in value.
It's a nice surprise, but I'm wondering if you generally have to pay tax on these payments?
Does it depend on the policy type? It's a Zurich Lifestyle Plus Plan.

If it's doing well why not carry on with it if you don't need the cash? But to answer your question, no it's not directly subject to income tax, but when you die it would still form part of your estate like any other asset, so a possible inhertance tax liability

I don't want to carry on paying the monthly premium. I was going to put the cash in money into my SIPP. It's under £10k.

[dalenorth]

It’s highly unlikely there will be any tax due, but best to call the provider and check

[Groat]

Doesn't it depend on whether or not you claimed its premiums as a business expense?

[Enut]

I would check whether the policy has critical illness cover before you cash it in.

[Caddyshack]

The actual answer is that you need to check that you would not break the "qualifying rules" (google that term as it is pretty simple to work through the tax rules). The provider may be able to help you.


This has nothing to do with paying the premiums from a company or not as that is a whole other set of rules.

[Rollin]

Thanks all. Looks like I wouldn't break those qualifying rules. I'm waiting for a response in writing from Zurich Assurance. They are slow.