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Where Taxpayers and Advisers Meet

'Qualifying' savings programme exempt from CGT?

AnthonyF
Posts:3
Joined:Wed Aug 06, 2008 3:13 pm
'Qualifying' savings programme exempt from CGT?

Postby AnthonyF » Wed Aug 04, 2021 5:19 pm

I have a savings policy with Sanlam to which I contributed regular monthly savings for about 30 years. This incorporates a life assurance element.

I just spoke to them about surrendering part of the policy and they told me the savings are tax exempt as the savings programme is a 'qualifying programme'.

Can this be correct? I can't find any reference to qualifying programmes on gov.uk.

ben_power
Posts:62
Joined:Tue Feb 27, 2018 8:34 pm

Re: 'Qualifying' savings programme exempt from CGT?

Postby ben_power » Wed Aug 04, 2021 8:40 pm

Sanlam are probably correct. Life Assurance investment policies are not liable to CHGT but income tax.

Qualifying rules are rules set out by the HM Revenue and Customs that will allow certain types of life insurance investment plans to pay out benefits either on death or surrender tax free.

If a life insurance investment policy is classed as a qualifying policy for tax reasons it has to fit within certain rules but, if the rules are adhered to, the proceeds of the policy will be completely tax free. The insurance company will still pay taxes on the fund whilst the policy is in force.

Qualifying policies:

For a life insurance investment policy to be qualifying it must meet the following rules:

A policy must be for a term of at least 10 years
Premiums must be at least annual and paid for 10 years or until death.
Life assurance equivalent to 75% of the total premiums paid must be included.

AnthonyF
Posts:3
Joined:Wed Aug 06, 2008 3:13 pm

Re: 'Qualifying' savings programme exempt from CGT?

Postby AnthonyF » Thu Aug 05, 2021 1:26 pm

Thanks for your response.

At the start you said that the policy will be liable income tax, but later you state 'the proceeds of the policy will be completely tax free'.

Do you mean completely free of CGT, but not income tax?

Anthony

ben_power
Posts:62
Joined:Tue Feb 27, 2018 8:34 pm

Re: 'Qualifying' savings programme exempt from CGT?

Postby ben_power » Sun Aug 08, 2021 5:44 pm

Free from CGT.

It 'may' be liable to income tax but not if it has 'qualifying' status.

Sanlam will be able to explain/confirm this.


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