How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask TonyTax Your Own Question
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15979
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
Type Your Tax Question Here...
TonyTax is online now

We have a Pru fund investment plan which has been in place

This answer was rated:

We have a Pru fund investment plan which has been in place since 2009
Joint with my husband
Initial investment of £9k is now worth approx £14k
Want to cash it in but don't understand Pru's guide to tax on the investment
Both employed - I earn £40k per year - Husband earns approx £30k per year
Pru allow part or whole cash in but don't want to get caught re tax if at all possible
We have never taken any part payments out of this fund in the past
Please can you clarify how much we can take out at any one time (preferably all) before being liable for tax.
I have assumed that the original investment is not liable for tax but please clarify.


Let me take a look at this and I'll get back to you in a bit.

Take a look at HS320 if the bond is a UK bond or HS321 if the bond is an offshore bond.

if you cash in the bond after 9 complete years, you will each make a chargeable event gain of £2,500. Assuming the bond is a UK one, the gain will be treasted as having suffered tax at 20%, £500. Your husband is a basic rate taxpayer and will clearly have no tax to pay if the bond is a UK bond. If you divide £2,500 by 9, you get £278 which you should add to your income to see if it takes you into the 40% tax band which starts at £43,000. If it does, then you will have tax to pay of a maximum of £278 @ 20% (40% - 20%) x 9), ie £500.40. If you earn £40,000, you won't be a higher rate taxpayer once you add in the 1/9th of your share of the gain and there will be no tax to pay.

If the bond is an offshore one, then there will be no 20% tax credit treated as paid so you will each have a liability of £500.

I hope this helps but let me know if you have any further questions.


I'm just following up to find out if my answer helped or if you have any further questions.

TonyTax and other Tax Specialists are ready to help you
Customer: replied 1 year ago.
Thank you this is very helpfulRegards
Karen Munn