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Sam
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Category: Tax
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I have a 10 year maturing next year with one off interest of

Customer Question

I have a 10 year maturing next year with one off interest of £53,000. My annual income in the last seven years has been under £13,000 as I am retired how can I minimise tax on this income please.
Submitted: 3 months ago.
Category: Tax
Expert:  Sam replied 3 months ago.

Hi

Thanks for your question

Can you provide more information please

1) A year 10 what? P

2) How much did you invest - how much will pay out

3) Did you make regular contributions or was this a one off lump sum investment

4) Did it pay out anything during the period of investment

Thanks

Sam

Customer: replied 3 months ago.
It is a 10 year bond, I invested £65,000, it will pay out the capital plus 75%, The interest is not annual but one payment at 10 years. I have made no other contributions. Can I spread the income over two years to avoid higher rate tax.
Expert:  Sam replied 3 months ago.

Hi

Thanks for your response

I need more information as some bonds fall into being chargeable under capital gains, whilst others income tax - I fear this is a capital gains bond

So can you advsie who you invested this with and the specific name of the bond

Thanks

Sam

Customer: replied 3 months ago.
The bond is called a Ten Year Merger Bond - Return Paid on Maturity, Issued by the Skipton Building Society
when they merged with the Scarboro Building Society, they were for 5 or 10 years.
Expert:  Sam replied 3 months ago.

HI

Thanks for the further information

Assuming you have not made any withdrawals then you will be liable to capital gains tax on this payout - and due to the size of it then some of it will be charged at 28% (technically £30,000 at 18% and the additional profit at 28%

But as you have been a basic rate taxpayer for the last 7 years then you will be eligible to claim some of this back due to top slicing that recognises that in your case at least 7/10ths of the payout in excess of the 18% charge could in fact just remin chargeable to 18%

So the company will only charge you at 18% and you have to declare this to HMRC for an additional tax to be established which takes your top slicing claim into account.

This top slicing you will need to claim from HMRC on the self assessment tax return (so after 05/04/2017 if the payout is between now and 05/04/2017)

Let me know if I can assist further - or if you have all that you need, then it would be appreciated if you could rate me for the level of service I have provided.

Thanks

Sam

Expert:  Sam replied 2 months ago.

Hi

Did you need any further assistance?

Thanks

Sam

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