Saving insurance purchased overseas

I purchased a saving insurance policy in 2018 and total premium paid was US$100,000. I moved to the UK in 2022. If I surrender the policy now, I would be able to get back the basic cash value of US$55,000, dividend of US$5,000 and special bonus of US$50,000, which result in a total of US$110,000. Can I understand if this receipt will result in any taxable gain? If yes, will the gain be the excess amount over premium (i.e. US$10,000) or the whole amount of dividend plus special bonus (i.e. US$55,000)? Many thanks!

Hi K Pang,
Please refer to guidance at HS321 Gains on foreign life insurance policies (2023).
Thank you.

Hi HMRC Admin 21 Thanks for your answer. I have read the guidance at HS321 and I consider there will be a gain when I surrender the policy. But I would like to clarify how the gain in my case would be calculated, whether it will be US$10,000 or US$55,000? Thanks again!

Hi,

It needs to be converted to sterling and you should refer to the section, calcuating a gain, from the previouls link sent for HS321.

Thank you.

Hi again Let me change the figure into GBP and ask again. I purchased a saving insurance policy in 2018 and total premium paid was GBP79,400. I moved to the UK in 2022. If I surrender the policy now, I would be able to get back the basic cash value of GBP44,000, dividend of GBP4,000 and special bonus of GBP39,700, which result in a total of GBP87,700. I have referred to HS321 and believe there should be a gain when I surrender the policy. But I could not find a clear explanation from HS321 to explain how the gain should be caculated. Thus my question is, whether the gain will be (1) the excess amount over premium (i.e. GBP8,300) or (2) the whole amount of dividend plus special bonus (i.e. GBP43,700)? Many thanks!

Hi,

The gain on a policy is the sum paid out, minus the payment into the policy.  When the policy is surrendered, you will be given a chargeable event certificate, as calculated by the policy provider. This gain is subjet to tax as interest. You should discuss this with your policy provider, as they have more information about your policy.

Thank you.