Taxation Of Life Policies Flashcards
What is the minimum term for an endowment to be a qualifying policy?
10 years
To what tax is a chargeable gain subject to?
Income Tax
What tax might the buyer of a second hand endowment be subject to?
Capital gains tax
How is a chargeable gain calculated on a death claim on a life policy?
Surrender value + capital - premiums paid + total gains on any previous chargeable events.
What is the top slicing procedure?
The division of the chargeable gain by the number of full years that the policy has been in force.
What tax rates is a chargeable gain on a UK life policy subject to?
Income tax at the higher rate (and additional rate if applicable) minus the basic rate.
How is the tax on a chargeable gain collected?
By HMRC on the details from the tax return completed by the policy holder with aid from the certificate issued by the life office.
When might a life policy be subject to capital gains tax?
When it is disposed of by someone who acquired it for money or moneys worth.
What type of assignment would constitute a chargeable event on a non qualifying policy?
An assignment for money or moneys worth, but not if it is to spouse /civil partner or if it is a mortgage.
