Your IndustryJul 18 2013

Q&A: Life insurance policies and tax treatment

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Care needs to be taken when deciding in which year a gain is taxable. If the gain is made when the policy comes to an end due to death or the maturity, sale or surrender of the whole policy it is simply the tax year that event falls in. However, if there is a partial surrender or sale, then it is the tax year in which the last day of the policy’s insurance year falls. An insurance year is usually the 12-month period from when the policy is taken out.

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Ben Chaplin is managing director of TaxWise