Investment Bond CGT Question

pjadams

Hello,

I wonder if any one has any tips on CGT, I cashed in part of my investment bond in the last tax year and got a notice that I need to pay CGT. Can I get some sort of valuation of my bond at the end of the tax year seeing how it is likly to have lost money so that I can write this off against the CGT I owe?

Many thanks in advance.

Regards

Paul Adams

CLAPTON

only realised gains or loses count for CGT purposes (i.e. you have to actually cash the bond if you want to offset the lose against other gains)

pjadams

Thank you for the reply.

dunstonh

Investment bonds have no liability for capital gains tax. They are tax under income tax.

space_trooper

Dunstonh... you've got me worried now. When I cashed in my Investment Bond I was told there was no liability for CGT, but are you saying the proceeds are added to my income and taxed as such ? Nobody mentioned this to me. I thought the whole thing was tax paid by the company running the plan.

swiss69

Investment Bonds are taxed under income tax not CGT. You will only have a liability to pay if you are a higher rate tax payer or if the gain when added to your income takes you into the 40% rate. Even then you can do a calculation called Top slicing to see if you will need to pay tax.

If you are Higher rate already you will pay 20% on any gain you make.

If the other scenario applies the calculation is more complicated but let us know the full detail and I am sure someone could help.

The fact that you got a notice stating you may have CGT to pay concerns me a little though. Is it definately an Investment Bond that you held?

space_trooper

How is the gain calculated. Is it the total premiums paid over the term of the investment taken away from the final payout. What about the life insurance element of the premium ?

swiss69

Surrender Value plus withdrawals - Original Investment plus additions.

Is it definately an Investment Bond with an Insurance company?

How big is the gain and waht is your tax position?

sdooley

I cashed in part of my investment bond in the last tax year and got a notice that I need to pay CGT

This bit makes me think it's not an investment bond in the strict sense but something within the capital gains regime like a preference share (or a Guaranteed Equity Bond - are they CGT?)

space_trooper

I've just dug out the certificate i got sent dated 7 November 2007

lower rate tax has been paid
number of yeras 8
amount of tax treated as paid 5874
amount of gain 29369

I am a standard rate tax payer.

policy was in joint names with wife

she doesnt pay any tax.

I'm glad you pointed this out, because i had no idea this was to be mentioned on tax return.

I'm wondering what my liability will be ?


nb: just inputted numbers into Taxcalc and it didnt increase my tax due.... good sign

Since it was a joint policy should I enter half the gain and half the tax treated as paid on the tax return ?

swiss69

Yes half each. If you are well under Higher rate tax you should be ok. Was it definately an Investment Bond?