HMRC has left one million endowment policyholders in limbo after new tax rules threaten the entire market, Lynda Kennedy, secretary of the Association of Policy Market Makers, has said.
The Finance Act 2013 introduced changes in tax regulations making traded endowment policies, once traded, non-qualifying. Buyers of policies, who were initially subject only to capital gains tax, are now subject to income tax.
Ms Kennedy said: “This made the purchase of such policies unattractive, and punishes the small investor. Fewer purchases mean less competition and leaves consumers surrendering their policies at a lower value than they could get on the TEP market.”
Right to reply
A letter sent by HMRC to Ms Kennedy outlined the reason behind its decision: “After assessing the estimates and projections provided by your members, the government does not consider that there is a strong enough case for legislative change, particularly with the market ceasing in the early 2020s.”
