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    • fred246
    • By fred246 19th Mar 17, 1:47 PM
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    fred246
    Urgent Help Please
    • #1
    • 19th Mar 17, 1:47 PM
    Urgent Help Please 19th Mar 17 at 1:47 PM
    I have an elderly relative with dementia in a care home. I am paying the fees. I have power of attorney and am trying to work out her finances. She has a 'flexible bond' with £50K in it. She paid £10K for it in 1990. When I took over her POA I asked them about the tax situation as I am only used to ISAs. They have replied that £40K is a 'chargable gain'. I am now panicking about the Capital Gains Tax situation. I was going to use her cash reserves that were paying no interest first but now think I may need to sell some of the bond before the new tax year. Has anyone any advice? How do you calculate how much to sell?
Page 1
    • enthusiasticsaver
    • By enthusiasticsaver 19th Mar 17, 2:03 PM
    • 3,555 Posts
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    enthusiasticsaver
    • #2
    • 19th Mar 17, 2:03 PM
    • #2
    • 19th Mar 17, 2:03 PM
    I am looking into this myself at the moment as we are selling a second property. The annual allowance is £11100 and apparently you cannot carry forward previous years allowances. Can you part sell the bond over 4 tax years to utilise 4 years allowances? Presumably if you sell 25% of the bond that would be £2500 original cost and £12500 sale value so net chargable gain of £10k which would be within one years tax allowance? That would mean no tax due and you raise £12500 and then do the same for the following 3 tax years assuming the value does not change significantly.
    Debt and mortgage free and saving for early retirement
    • LHW99
    • By LHW99 19th Mar 17, 2:03 PM
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    LHW99
    • #3
    • 19th Mar 17, 2:03 PM
    • #3
    • 19th Mar 17, 2:03 PM
    Have you considered getting independent financial advice? Not just on this, but also on the care fees aspect?
    Does your relative get higher level attendance allowance? If not, you should apply because it takes time for the assessment to complete, and the payments to be implemented.
    • Dazed and confused
    • By Dazed and confused 19th Mar 17, 2:21 PM
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    Dazed and confused
    • #4
    • 19th Mar 17, 2:21 PM
    • #4
    • 19th Mar 17, 2:21 PM
    I wouldn't be convinced this is a capital gains tax issue.

    "Chargeable gains" associated with bonds are sometimes income tax related. It is a complex area but the the pru has some info here which would be a start.

    http://www.pruadviser.co.uk/content/knowledge/technical-centre/taxation_uk_investment_bonds/
    • fred246
    • By fred246 19th Mar 17, 2:23 PM
    • 778 Posts
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    fred246
    • #5
    • 19th Mar 17, 2:23 PM
    • #5
    • 19th Mar 17, 2:23 PM
    Have you considered getting independent financial advice? Not just on this, but also on the care fees aspect?
    Does your relative get higher level attendance allowance? If not, you should apply because it takes time for the assessment to complete, and the payments to be implemented.
    Originally posted by LHW99
    She was on DLA so has the highest level of that which is the same I think. As a POA can you use her money to pay for financial advice? I am spending hours of my time managing her estate I don't particularly want to pay for it as well.
    • soulsaver
    • By soulsaver 19th Mar 17, 2:28 PM
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    soulsaver
    • #6
    • 19th Mar 17, 2:28 PM
    • #6
    • 19th Mar 17, 2:28 PM
    After checking the nature of the bond's taxable status, if it is a cap gain - does flexible mean you can cash a portion of it each year? If so and you get your finger out, you could get £25k out over the next few weeks like described above, using up cap gains allowance £12.5k this side of April 5th and £12.5k straight after.

    Always assumes no other cap gains in this tax year.

    You may get informed responses on the tax board, too.
    Last edited by soulsaver; 19-03-2017 at 2:32 PM.
    There are 24 bottles of beer in a crate. There are 24 hours in a day. Coincidence? I think not....
    • picks
    • By picks 19th Mar 17, 3:04 PM
    • 173 Posts
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    picks
    • #7
    • 19th Mar 17, 3:04 PM
    • #7
    • 19th Mar 17, 3:04 PM
    She was on DLA so has the highest level of that which is the same I think. As a POA can you use her money to pay for financial advice? I am spending hours of my time managing her estate I don't particularly want to pay for it as well.
    Originally posted by fred246
    Yes, as POA you can use the donor's money to pay for any reasonable expenditure in order to benefit the donor.
    • xylophone
    • By xylophone 19th Mar 17, 3:42 PM
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    xylophone
    • #8
    • 19th Mar 17, 3:42 PM
    • #8
    • 19th Mar 17, 3:42 PM
    What is the name of the bond and who is the provider?

    Have you looked into an immediate needs care annuity?

    https://www.ftadviser.com/2015/06/11/pensions/annuities/getting-to-grips-with-immediate-needs-annuities-Kk30eC7jC9jCQTuR1qSJKI/article.html

    You will need expert advice - see below.

    http://societyoflaterlifeadvisers.co.uk/
    • aliby21
    • By aliby21 19th Mar 17, 6:23 PM
    • 123 Posts
    • 53 Thanks
    aliby21
    • #9
    • 19th Mar 17, 6:23 PM
    • #9
    • 19th Mar 17, 6:23 PM
    OP this might be useful to read, especially the section on "how gains are taxed"

    http://www.taxationweb.co.uk/tax-articles/general/guide-to-the-taxation-of-investment-bonds-for-accountants-solicitors-and-policyholders.html

    HTH
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