Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.
Bad news, I'm afraid; she is liable to Capital Gains Tax (CGT) on the gain made ie 52.6K - 18.5K = 34.1K. From this deduct her Annual Exempt Amount (AEA) of 11.1K leaves 23K exposed to CGT. This will be levied at 18% or 28% or a combination of the two rates depending on your Mother's income including the gain in the tax year of maturity. Worst case scenario is a tax bill of a tad under 6.5K.
I am so sorry to have to rain on her parade.
I have a different answer. I'm assuming that there have been no withdrawals from the bond since it commenced. Let me know if that is not the case.
If there is life assurance attached, it is a single premium investment bond which has been running for about 21 years. If the bond is a UK one, the gain if it is surrendered will be treated as basic rate tax paid. In order to determine whether there is a liability to higher rate tax, you would divide the gain by the number of complete years, say 21, giving you £1,624 (£52,600 - £18,500 / 21). Add the £1,624 top- slice to your mother's income and to the extent that the result of that sum exceeds £43,000, she will have tax to pay on the excess over £43,000 at 20% (40% - 20%) x 21. Take a look at HS320 here for more information:
If the bond is an offshore one, the gain if it is surrendered will not be treated as basic rate tax paid. In order to determine whether there is a liability to higher rate tax, you would divide the gain by the number of complete years, say 21, giving you £1,624 (£52,600 - £18,500 / 21). The minimum income tax liability assuming your mother's income exceeds £11,000 in a full tax year will be £6,820 (20%).
To the extent that your mother's other's income exceeds £43,000 when the £1,624 top-slice is added, there will be tax to pay at 40% on the excess over £43,000 x 21 in addition to the 20% liability on that part of the gain within the 20% tax band. Take a look at HS321 here for more information:
I hope this helps but let me know if you have any further questions.
The new CGT rate is 10% for basic rate taxpayers but the point is, that any gain on this bond is covered by income tax, not CGT. Please read the helpsheets.