Chargeable Event

notbritishgas

My wife has an income of £4000 pa, I have therefore put some of our BS accounts in her name and have elected on most of them to have interest paid gross. The aim being to make her income just below the personal allowance. One year I miscalculated by £120 and she received a letter from the taxman saying she was classed as a taxpayer and should not have received the interest gross. No probs with that, those are the rules.
Now to my question, this year I have estimated once again her income to be just below £6475. However I would like to cash in an insurance bond (Zurich) in joint names and understand that a notional amount of tax will have been paid on the profit which is classed as a chargeable event.
So will this profit be classed as taxed income, taking her well over the personal allowance once again?

John_Pierpoint

Is this the game where you can cash in 5% a year and not pay any tax on the "capital gain" (as the insurance company has paid tax already), thus producing an annual 5% capital income.?

fengirl_2

The notional tax paid on this bond relates to the investment company's CT liability and has nothing to do with your or your wife's liability (assuming you are BR taxpayers).

notbritishgas

Thanks for replies.
John, yes we could have taken 5% annually with no tax implications, but we didn't.
But my question was will the profit on the bond be classed as taxable income (I know she will not have a tax liability) taking my wife well above the personal allowance, meaning that really we should deregister her BS accounts from getting gross interest.
When she completed the R85 she had to certify that she was not a tax payer and if her income goes above £6475 she is classed as a taxpayer.

fengirl_2

Please refer to my post above - no it does not.