Tax Reporting Inquiry Regarding Foreign Life Insurance Dividends in Hong Kong

I have held a foreign life insurance policy in Hong Kong for approximately 25 years. The dividends generated from this policy have been left on deposit, accruing interest. I have not withdrawn any dividends since the policy became effective. Additionally, the sum of the premium payments made each year exceeds the dividends generated annually. I would like to know if I should include these dividends when completing my self-assessment tax return. Your guidance on this matter would be highly valued and appreciated. Thank you.

Hi C CYK,
Please note that you are only required to report information about an overseas Life Insurance policy in the following circumstances:    
- cash or other benefits are received on a full or part surrender of a policy
- a policy matures or is brought to an end by the death of the life insured
- there is a sale or assignment of a policy (or part of a policy) for value
- the policy is a personal portfolio bond (even if the insurer has not paid cash or other benefits during the year)
HS321 Gains on foreign life insurance policies (2023)
Thank you. 

Thank you for the detailed explanation regarding the reporting requirements for overseas Life Insurance policies. In light of the provided information, it appears that the mentioned circumstances, such as cash or other benefits upon surrender, policy maturity due to the life insured's passing, sale or assignment of the policy for value, or the policy being a personal portfolio bond, do not align with my situation. Specifically, as a permanent life insurance policyholder, the dividends I receive annually represent my share of the insurance company's distributable surplus and the dividends left on deposit are credited with interest. Therefore, I seek clarification regarding whether I am obligated to report information regarding these dividends generated from the overseas Life Insurance policy. Your guidance and insights on this matter would be immensely valuable. Thank you.

I have similar questions about overseas insurance & saving plan and woud like to know more to help out filling in my tax return. I started an endowment saving-insurance plan in 2002. I paid premium for 15 years (ie from 2002-16) and the plan matured in 2017. From 2017, I started to receiving montly instalment payment of 1% of the Maturity Benefit for 10 consecutive years (ie payout will stop in 2027). In this case, do I have to report my “montly payout” in the tax return? If so, as dividend or interest income? More, I would be grateful if could let me know whether I am entitled to apply for any exemption on “premium paid”? Your information and advice are highly appreciated. Thanks in-advance for your kind help. Cheers

Hi C CYK,

As you are receiving an income, yes you need to report these as foreign dividends on the SA106.

Tax on foreign income

Thank you.

Thank you for your response. I have recently confirmed with my insurance provider that my life insurance policy qualifies as a qualifying policy. Given this classification, could you kindly advise if I am still required to report the dividends and interest stemming from this policy? Your additional guidance on this matter would be greatly appreciated.

Hi,

It depends on the type of policy. please refer to guidance at:

Gains on foreign life insurance policies (Self Assessment helpsheet HS321) 

IPTM3400 - When events occur

Thank you.

Thank you for your prompt response. Let me consolidate my inquiry again. I have held a foreign life insurance policy, a qualifying policy, specifically a Whole Life Limited Payment Policy in Hong Kong for approximately 25 years. Additionally, it is a participating policy with annual dividends. The dividends generated from this policy have been left on deposit, accruing interest. I have not withdrawn any dividends since the policy became effective. During the past years, there has been no sale or assignment of the policy for value. Under these circumstances, could you kindly advise if I am still required to report the dividends and interest stemming from this policy? Your additional guidance on this matter would be greatly appreciated.

Hi C CYK,

Helpsheet HS321 (2023) advises that most foreign policies are non qualifying policies, that normally give rise to a gain and is subject to Income Tax. Payments from qualifying policies, would not be taxable and do not need to be reported.  

HS321 Gains on foreign life insurance policies (2023)

Thank you.

Hi C CYK,

Further to your most recent post, yes. Please see further guidance below.

Tax on foreign income

Thank you.