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bigduckontax, Accountant
Category: Tax
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I am now , after the death of my partner in July 2013, the

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I am now , after the death of my partner in July 2013, the sole holder of a Bond held with Clerical Medical International on the Isle OF Man. From the time of investment no monies have been removed from the Bond and I have been told by CMI that a person is allowed to with draw up to 2,000 per annum with tax deferred.The Bond has been held years so I could in theory take up to £28,0000 if I wished. I now wish to use some of the investment ,probably £8 to £10 thousand.Am I able to withdraw funds before declaring it to HMR assessment and if so how much could I could I bring in. I am not sure if I was ever declared By my partner as he was a non UK tax payer until his death.
, I'm Keith and happy to help you with your question.
This was a great investment partner as you will see from this extract from the Telegraph:
'That is because of the way the proceeds escape UK income tax if the bond is cashed in while the holder is non-resident. Bondholders can also withdraw annually up to five per cent of the value of the bond tax-free of UK tax.'
However, it may be no better than any other form of investment. However, if the bond is an insurance/life assurance one then there is a favourable tax treatment. According to Prudential viz:
'Investment bonds have a different tax treatment from other investments. This can lead to some valuable tax planning opportunities . There is no personal liability to capital gains tax or basic rate income tax on proceeds from your bonds. This is because the fund itself is subject to tax, equivalent to basic rate tax.
You can withdraw up to 5% each year of the amount you have paid into your bond without paying any immediate tax on it. This allowance is cumulative so any unused part of this 5% limit can be carried forward to future years (although the total cannot be greater than 100% of the amount paid in).
If you are a higher or additional rate taxpayer now but know that you will become a basic rate taxpayer later (perhaps when you retire ) then you might consider deferring any withdrawal from the bond (in excess of the accumulated 5% allowances) until that time. If you do this, you will not need to pay tax on any gains from your bond.'
There is clearly a possibility of substantial tax savings here, but as the sums involved are quite substantial and an error could prove quite dear, I would advise that you run the matter across a trusted. local professional .
Customer: replied 3 years ago.

Thank you answer but you have told me what I basically told you. As you have not said there is a limit to the amount I can bring in or that I can't do it before contacting HMR I presume It is alright to bring in the amount I stated in my question. I have a tax threshold of £10,000 and earn £3455.00 per year at at the moment. The Bond has a life policy attached to it so I do not wish to use it all.

To fully respond I need to know the total value of the bond at present, please. On your response I can frame my answer.
Customer: replied 3 years ago.

The Fund value without bonuses is £49,101.74 with Bonuses £61,377.14 I hope this helps. My partner was first named and I second when the Bond with attached life cover was bought.I don't know if that has any relevance.

It would appear that you have 5.5K slack in the bond which can be withdrawn tax free. The balance would be taxed at your marginal rate which as far as I can see from your question would be within the personal allowance envelope and thus escape taxation.
Customer: replied 3 years ago.

Thank you help, you are a star. Do you happen to know if bringing more than £9,000 in from the Isle of Man is likely to present a problem bearing in mind the UK policy on Money Laundering as I have a feeling that the Bond was not declared to HMR by my Partner before his death and I didn't realise that because of this I should have done it when it passed to me. I am putting in a Declaration Application request but need to get my fund withdrawal request in the post today and don't want to cause problems by asking than I am allowed. I know that you may not be able to help me with this but so far I haven't been able to get an answer from any one I have asked .

It is frankly probably too low to attract attention, but to be on the safe side warn your bank of the incoming funds and the source to ward of any inquiries.
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Thank you support.