New queries, issue 4524

Endowment policy

The tax implications of the maturity proceeds of an endowment policy.

My client Mr Z bought a house many years ago with an endowment mortgage. He occupied the property as his main residence for four years and then sold it. During that time he repaid the mortgage capital. However based on advice from an independent financial adviser he continued to pay the endowment insurance premiums and the policy is soon to come to the end of its term.

I should be grateful if readers could advise me on the tax implications of the endowment payout.

The endowment policy company was informed at the time that the mortgage had been repaid so the payment on maturity would be made directly to Mr Z rather than to the lender.

If there is a tax liability what steps might Mr...