Is life insurance payout taxable?
Life insuranceTrusts
The short answer
Payouts from personal life insurance are not normally subject to income tax or capital gains tax. However, if the policy is not in trust, the payout usually forms part of your estate and may count towards inheritance tax. A policy written in an appropriate trust is usually kept outside the estate.
Joint policies
Payouts to a surviving spouse or civil partner are usually exempt from inheritance tax.
Business policies
Tax treatment can differ for business protection policies.
Get advice
Inheritance tax rules are complex. Speak to an adviser about your circumstances.