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Hi. My name is*****'m looking at your question now and will post my answer or ask for more information here in a short while.
What is the number of relevant years show on the certificate? Did your wife withdraw cash from the bond between the original investment date and when it was cashed in?
It does. I'll get back to you this morning.
Can you tell me what your wife's annual pre-tax income was for the tax year in which the bond was surrendered please. How much of the bond in percentage terms was cashed in? What was the start date of the bond? How many years did your wife make £200 per month contributions before they were reduced to £100 per month?
Your wife is clearly a 40% taxpayer so she will have a tax liability on the chargeable event gain (wahtever that is) of 20% of the gain (40% - 20% tax treated as paid as show on the certificate).
You might take a look at the notes under "Qualifying policies" here. On a full surrender, the gain would normally be calculated by taking the intial premiulm, adding in any additional premiums paid and deducting the total from the sum of the surrender proceeds and previous cash withdrawals. Without a copy of Prudential's calculations I'm at a loss to understand how the gain of £33,680 was arrived at if the surrender proceeds were £50,000.
Normally, chargeable event gains don't occur on continuous premium payment bonds, just on single premium bonds so that is another oddity. However, the notes do give details of the circumstances when a chargeable event gain can arise on monthly contribution bonds. If I were you, I'd contact Prudential and ask them to send you a copy of their calculation of the gain or to explain it over the phone while you take notes. I'd be happy to take a look if you upload it to me using the paperclip tool and after having blanked out your wife's name, address and bond number on any.
I hope this helps but let me know if you have any further questions.
I'm afraid it doesn't. I would need to see the Prudential calculations. As you say in your initial question, £38,400 has been invested, £50,000 has been withdrawn and very little is lef in the bond.
In a single premium case, the gain would be calculated by taking the surrender proceeds and deducting the single premium. That's easy. you are also allowed to take out 5% of the original investment per policy year tax free and any such withdrawals are taken into account at the end in computing the gain. The notes here tell you how the tax works.
I would also ask Prudential why the policy is a non-qualifying. I'd be happy to look at the calculations when you receive them.