Traded Endowment Policiy (TEP) Tax Implications

Teps can be either qualifying or non-qualifying in the UK. Most of traded endowment polices are qualifying.

Qualifing polcies are subject to captial gains tax, on maturirty, death claim or if they are resold. The capital gain is worked out by deducting the price and premiums from the amount recieved. This amount is tapered depending on how amny of complete years that the TEP has been held since April 1998.

This capital gain can be even further reduced by using the annual tax-free allowance and policies purchased in joint names can use both captial gains tax allowances.

However Policies bought before 6th April 1998 will partially be subject to the previous capital gains tax regulations.

Non-qualifying policies may be subject to income tax of maturity, at a death claim or when traded. However only for the higher tax rate payers.