COMPENSATION FOR MIS-SOLD ENDOWMENTS

Compensation for mis-sold endowment policies and other investments may include an element of interest.

A new point has arisen, which we must ask clients to watch when compiling the information for their annual Tax Return. Compensation for mis-sold endowment policies and other investments may include an element of interest – the most straightforward example is where an insurance company simply refunds the premiums paid, plus interest.

Such interest is taxable (except in the case of mis-sold pension plans, for which there is a statutory exemption) and so should be declared on the investor’s Tax Return. So if you have received this kind of interest, we need to know about it. If you have received a compensation payment but are not sure whether it includes interest, we shall need to see the relevant documentation.

IMPORTANT: This newsletter deals with a number of topics which, it is hoped, will be of general interest to clients. However, in the space available it is impossible to mention all the points which may be relevant in individual cases, so please contact us for personal advice on your own affairs.