GCT and Penalty Charge for cashing in investment

pjadams

Hello,

I am currently working on my tax return online, and I have an issue with an investment bond.

I invested a sum of money on the 18th October 2006, and then I need to cash some money from my investment on the 17th October 2007 as a result I have to pay some CGT but also I had a penalty charge of £1555.56 to pay the investment company can I reduce the CGT by claiming the penalty charge?

Many thanks for any advice you can provide.

Regards

Paul

dunstonh

Investment bonds are not liable to capital gains tax. The fall under income tax. The surrender value is the amount used in working out what your gain is.

It was the CGT exemption that used to make investment bonds attractive.

pjadams

Thank you for that extra information. I have been told by the company that I have the bond with that I need to pay £3k and was charged £1555.56 so I was hoping to say that I only need to pay £1.5k if that legal ;-)

dunstonh

Are you referring to the chargeable gain? If so, that isnt in respect of CGT.

You take the chargeable gain, apply top slicing relief to it and add the slice to your income. If that takes you into higher rate tax you have a further calculation. If you remain a basic rate taxpayer then you have no further tax liability.