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  • FIRST POST
    • Mothman
    • By Mothman 9th Sep 17, 8:18 AM
    • 79Posts
    • 21Thanks
    Mothman
    Do Investment bonds count as income for pensions?
    • #1
    • 9th Sep 17, 8:18 AM
    Do Investment bonds count as income for pensions? 9th Sep 17 at 8:18 AM
    Does anyone know if the proceeds of an offshore investment bond which was surrendered and taxed at the higher rate would be classed as income for pension contribution purposes, so that it could be reinvested to get the tax relief, assuming one had sufficient contribution allowance?
Page 1
    • ffacoffipawb
    • By ffacoffipawb 9th Sep 17, 8:51 AM
    • 2,387 Posts
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    ffacoffipawb
    • #2
    • 9th Sep 17, 8:51 AM
    • #2
    • 9th Sep 17, 8:51 AM
    Does anyone know if the proceeds of an offshore investment bond which was surrendered and taxed at the higher rate would be classed as income for pension contribution purposes, so that it could be reinvested to get the tax relief, assuming one had sufficient contribution allowance?
    Originally posted by Mothman
    No, only earned income counts.

    You can invest £3,600 gross, £2,880 net regardless however.
    • xylophone
    • By xylophone 9th Sep 17, 10:56 AM
    • 23,426 Posts
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    xylophone
    • #3
    • 9th Sep 17, 10:56 AM
    • #3
    • 9th Sep 17, 10:56 AM
    http://www.pruadviser.co.uk/content/knowledge/technical-centre/tax_relief_members_contributions/
    • dunstonh
    • By dunstonh 9th Sep 17, 12:13 PM
    • 89,561 Posts
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    dunstonh
    • #4
    • 9th Sep 17, 12:13 PM
    • #4
    • 9th Sep 17, 12:13 PM
    Does anyone know if the proceeds of an offshore investment bond which was surrendered and taxed at the higher rate would be classed as income for pension contribution purposes, so that it could be reinvested to get the tax relief, assuming one had sufficient contribution allowance?
    If you had earned income and did a surrender that pushed you into higher rate, you would get the appropriate higher rate relief on the pension contribution. So, pensions and bonds can be linked in some cases as a means of tax efficiency.

    However, the bond surrender is not earned income. So, you cannot use that segment of your income for pension contributions.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • kidmugsy
    • By kidmugsy 9th Sep 17, 4:48 PM
    • 9,842 Posts
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    kidmugsy
    • #5
    • 9th Sep 17, 4:48 PM
    • #5
    • 9th Sep 17, 4:48 PM
    you cannot use that segment of your income for pension contributions.
    Originally posted by dunstonh
    Allow me to nitpick. He can use any cash he fancies irrespective of source. What he can't do is "use that segment of your income to justify pension contributions".
    • Mothman
    • By Mothman 10th Sep 17, 3:12 PM
    • 79 Posts
    • 21 Thanks
    Mothman
    • #6
    • 10th Sep 17, 3:12 PM
    • #6
    • 10th Sep 17, 3:12 PM
    Thanks for the replies, l have some unused pension contribution allowance from this year and the previous 3 years but probably not enough to cover the gain if fully surrendered. Think it may be wise to consult an IFA for advice before proceeding as I'm keen to avoid an unnecessary tax bill.
    • Malthusian
    • By Malthusian 11th Sep 17, 10:24 AM
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    Malthusian
    • #7
    • 11th Sep 17, 10:24 AM
    • #7
    • 11th Sep 17, 10:24 AM
    That would be very wise.
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