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Life Insurance with Critical Illness

Is the Life Insurance payout taxable?

Answer

The Life Insurance payout won't be liable for Income or Capital Gains tax. However, if your estate is large enough, there may be an inheritance tax bill to think about.

The current threshold is £325,000 (2017-2018) so if your estate will be higher than this, you may need to think about ways to mitigate the potential tax bill when you die. The standard Inheritance Tax Rate is currently 40% on the part over the threshold.

More on Inheritance tax

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