single premium with profit bonds one taken out in 1993 another in 2001 and 2002
Thanks.Now that I know what type of policies you have, can you tell me if you have ever taken any cash withdrawals? What were the original investments?
£6000 put in 1993
£20000 put in 2001
£35000 put in 2002 and income taken from this one
Hi again.Take a look at HS320 (UK) and HS321 (offshore) for information on single premium investment bonds. I will assume that the policies are UK policies for this answer.Assuming that you have never withdrawn more than 5% of the original investments in any one policy year, then if you cash them in, you will have a chargeable event gain if you get more out than you invested. That calculation will take account of previous cash withdrawals and chargeable event gains. Look under the heading "On maturity or full surrender" in HS320 to see how the gain is calculated. So, for example, if you invested £20,000 and withdrew £1,000 in each of two years and then cashed in the policy for £28,000, you will make a gain of £10,000 (£28,000 - £20,000 + £2,000).The gains will be top-sliced. That means they will be divided by the number of years since the last chargeable event or the start of the policies if there were no previous chargeable event gains. The top-slice is then added to your income and if the total is equal to or less than £42,385 in the current tax year, then there will be no income tax to pay as the gains on UK policies are treated as basic rate tax paid.If the top-slice is added to your income and if the total is more than £42,385 in the current tax year, then there will be some income tax to pay. For example, if the top-slice that goes into the 40% tax band is £6,000 and the number of years is 6, then the income tax charge will be £7,200 (£6000 x (40% - 20%) x 6). The number of relevant years in your case will be much higher I suspect. Take a look here for information on top-slicing relief.I hope this helps but let me know if you have any further questions.
sorry i cant hold on any longer
I posted my answer before your last post.
These are complicated issues and I always give a full answer. That takes time.