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Ask Your Own Question, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 5614
Experience:  FCCA - over 40 years experience as a qualified accountant (UK based Practitioner)
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I have an aviva Step Down Bond that I have held since

Customer Question

I have an aviva Step Down Bond that I have held since 2011.My initial investment was 40K, this is now worth around £52k. Due to the high fees I am looking to move this money. What would the tax liability be here ? I am a higher rate tax payer.
Submitted: 10 months ago.
Category: Tax
Expert: replied 10 months ago.

Hello and welcome to JustAnswer. I am here to help you. I am reviewing your question and will respond to you shortly.
Many thanks

Customer: replied 10 months ago.
Expert: replied 10 months ago.

Thank you for your question.

Your estimated growth is £12k. You would claim your gains annual allowance of £11,700 against it and the balance would be chargeable to CGT at 20% as you are a higher rate taxpayer.

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 10 months ago.
Hi, I thought that there would be an income tax liability here, rather than a capital gains from reading on the web. Am I wrong ?
Customer: replied 10 months ago.
I was reading about having to top slice the gain.
Expert: replied 10 months ago.

Thank you for your reply.

If you were to have income bonds, they would normally generate income in the form of interest and this would be subject to income tax at your marginal rate.

If your investment has grown from £40k to £52k from investment in bonds, I view these as chargeable to CGT.

I hope this is helpful.

Expert: replied 10 months ago.

I suggest you contact AVIVA and ask if surrender of step down bond would result in a chargeable event. If they confirm that it would give rise to a chargeable event, then the gain would be subject to income tax as you are a higher rate tax payer.

I hope this clarifies the position.

May I request you only rate my service if my answer is acceptable.

Many thanks