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bigduckontax, Accountant
Category: Tax
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I need to surrender the shares my mother holds to pay

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I need to surrender the shares my mother holds to pay for her nursing fees.She has them invested with Friends Life and are investment shares with profits.Thier value at the moment is £19,366 and with bonuses the final surrender value is £24,623.She pays a small amount of tax on a pension from the Post office.I have been told I need advice as to the best way to surrender this investment to make it tax efficient.I would be grateful for any advice you can give me.
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. Can you please advise in exactly what Friends Life fund she holds. One I know this I can address you problem properly.
Customer: replied 1 year ago.
My mother had life time investment shares with profits.
Customer: replied 1 year ago.
If this information is not adequate I will have to contact the company
I have looked at Friends Life and their various funds are supported with bags of waffle, but curiously very silent as to the individual holder's taxation position. Normally such matters as Income Tax exemption by a fund are widely trumpeted. I regret that you will have to ask Feeinds Life the exact name of the fund in which your mother's money is invested and the tax treatment expected.
Customer: replied 1 year ago.
I will contact them and cone back to you with the nessecary information .If there is any thing else I need to find out could you. Please let me know in the next hour as I have to go out now and cannot do it till I come back
As Dad's Army would say 'Don't panic!' I am usually around to respond to customers queries.
Customer: replied 1 year ago.
I have been in touch with the company,Ihave the following information.It is a friends Life with profit fund,it is none qualifying so is subject to tax.They said they issue a certificate stating how much the account has earned.Does this help any further?
Your mother should have declared the accumulating interest every year, but if that aggregated with her pensions does not breach the personal allowance then, as my old boss was wont to say, it won't alter the price of cheese though HMRC ought to know about it. The insurance company may have been deducting tax anyway which might reverse the situation and HMRC actually owe some tax! The encashment might give rise to a capital gain. However, she does have a non cumulative Annual Exempt Amount (AEA) of 11.1K to offset any gain so Capital Gains Tax (CGT) will probably be avoided. I do hope that helps. Please come back if you need more information.
Customer: replied 1 year ago.
I have been in touch again and have found out that over the years she has had some lump sums and 5%whiich see could have tax free in total amounting to £27590.She made an initial investment of £35 ,000and has with bonus £24,623 left.They can let me know what the profit will be but not till early May.So would you be able to advise me further as to whether to withdraw it all in one go or to stag it over 2years to incurr less tax?
Well those lump sums are outside the scope of tax providing they do not breach the 5% level so they do not have to be declared. Once you know the profit the calculation will be easy and I will be delighted to assist.
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Thank you for your support.