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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15707
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I HAVE AN INVESTMENT POLICY THAT HAS MATURED IN IRELAND IT

Customer Question

I HAVE AN INVESTMENT POLICY THAT HAS MATURED IN IRELAND IT WAS NOT TAXABLE IN IRELAND AS IM A NON RESIDENT.IF I WANT TO TAKE THIS MONEY AND PUT IT INTO A UK BANK AND USE IT TO PAY OFF MY MORGAGE WILL I HAVE TO PAY TAX ON THIS MONEY IN THE UK
Submitted: 2 years ago.
Category: Tax
Expert:  TonyTax replied 2 years ago.
Hi.

Can you tell me what type of policy you had please. Was it a single premium life assurance linked bond or a regular monthly premium policy? How long did it run for? Were you able to make withdrawals from it? Have you been issued with a chargeable event certificate?
Customer: replied 2 years ago.
The plan type was a protected consensus bond series 2
Expert:  TonyTax replied 2 years ago.
Was the bond with Irish Life? How long did it run for? Have you been issued with a chargeable event certificate or a certificate of any sort?
Customer: replied 2 years ago.
The bond was with Irish Life it was for 6 years I have a letter stating the gross surrender value and the net surrender value both are the same as I was not taxed on it as I'm non resident in Ireland
Expert:  TonyTax replied 2 years ago.
Thanks.

Leave this with me while I read up on the literature I've found online. Can you confirm whether you are a UK or an Irish national please.
Customer: replied 2 years ago.
Irish but I have lived in the UK since1987
Expert:  TonyTax replied 2 years ago.
I'm afraid I'm having trouble with this and will opt out if you would like to see if another expert has a definitive answer but if I have not been able to find anything on the UK tax treatment of the Irish Life consensus bond, then I doubt anybody else will.

If this were a UK bond, you would be issued with a chargeable event certificate telling you what the gain was and the number of years since it was taken out or since the previous chargeable event. You would only have tax to pay if the top-slice of the gain (the gain divided by the years the bond existed or the number years since the last chargeable event if there was one) took your income into the 40% bracket. That's because the gain on a UK bond is treated as basic rate tax paid. The part of it which did go into the 40% band would be taxed at 40%, the basic rate tax treated as paid would be deducted and the net tax figure multiplied by the number of relevant years as determined above to arrive at the tax liability on the gain. See HS320 for more information.

There are some notes on the UK tax treatment of non-UK bonds here. As far as I can determine, you have paid no Irish tax on the gain. If you divide the gain by six and add that to your income for 2013/14, if the total exceeds £41,865, then you will have some tax to pay at 20% and some at 40%. There will, however, be no basic rate tax credit to deduct from the overall liability. If your income including the top-slice is less than £41,865, then you will have tax to pay at 20% only.

As I said, I'm not 100% sure of the UK tax treatment. However, Article 20 of the UK/Eire tax treaty states that income not otherwise mentioned in the treaty and this type of income is not so mentioned will be taxable in the country of residence of the recipient. That would mean it is taxable in the UK.

You might consider contacting Irish Life or the financial adviser who advised you to buy the bond for their understanding of the UK tax treatment but given that the type of bond you had similar characteristics to UK bonds, I'd be surprised if the gain was not taxable in the UK on the basis that I have described..

I hope this helps but let me know if you have any further questions.

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