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TonyTax
TonyTax, Tax Consultant
Category: Tax
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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Hi Tony- does notional tax credit apply to this investment

Resolved Question:

Hi Tony- does notional tax credit apply to this investment?
Submitted: 3 years ago.
Category: Tax
Expert:  TonyTax replied 3 years ago.
Hi.

If you are referring to the offshore single premium investment bond that was given to you, the answer is no it doesn't.

Chargeable event gains which arise from UK investment bonds are deemed to have suffered tax at the basic rate, though this is a notional sum and is not repayable to the bond holder under any circumstances. If the top-slice of the gain does not take the recipient into the 40% tax band, then there will be no further tax to pay.

Offshore bond gains do not carry a basic rate tax credit since the profits of the issuing company are deemed to have arisen in a tax free environment. That is why you will have tax to pay on your gain if you surrender the bond. The bond company will confirm the position if you ask them.

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