Hello Tom, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.
This is extremely complicated and I would advise you to have a look here:
This will take some time. Please come back to me if you need more advice.
Here are the salient points extracted from the Moneywise article:
'If you cash in your bond, this will be treated as a chargeable event and so you need to work out whether you will have an additional income tax liability.
This is done by adding the gain you've made, including any withdrawals that have been taken, to your income for that tax year to see if it pushes you into the higher-rate, or additional-rate, income tax band.
However, this would be unfair to those who have held their bond for a long time, as they are likely to have made bigger gains, and so to determine any tax liability, the gain is divided by the number of years the bond has been held, called 'top slicing'.
You've made a gain of £37,487.75 on your bond over a period of 20 years and so the top sliced gain is £1,874.39 each year. However, as you hold the bond jointly with your wife you are deemed to own half the investment each and so you've both made a top-sliced gain of £937.19.
This amount of £937.19 is added to your income, and to your wife's income, in the tax year you cash it in and as long as this doesn't push either of you into the higher rate tax band you'll have no further income tax to pay.'
I do hope that you have found my reply of some assistance.