Cashing out a Bond 31 July 2010 at 7:27PM in Savings & investments 2 replies 668 views

Slubberd

Hiya

I hope you guys can clarify something for me.

About 11 years ago my father died and left some money to my little sister. He insisted that I be trustee of the money until she became a responsible age.

I invested the money, on advice from my IFA, in a bond in my own name. I have recently been sent the cash out documents from the company and it clearly states that it is taxable under current laws.

It was my intention to cash it and transfer the full amount to her bank account.

1. I earn about £13000 a year in paid work. I don't fill in tax returns or anything like that. Is there any likelihood I will be taxed?

2. Is it safer to transfer the document into her name and let her cash it out?

Your help would be appreciated. Unfortunately the IFA I previously took the advice from is no longer around.

dunstonh

Is there any likelihood I will be taxed?

If its an onhore bond then it unlikely unless the gain after top slicing relief takes you into higher rate tax (roughly, take the gain on the bond, divide it by the complete number of years and add that figure to your income. If you still remain a higher rate tax payer after that then there is no tax to pay).

2. Is it safer to transfer the document into her name and let her cash it out?

Safer doesnt really come into it. However, means tested benefits may. Investment bonds are not included in means tests. However, cash is. So, the policy could be assigned to her if you wanted but equally, it will be hers to do as she wishes. If she wants the cash, then you may as well surrender it and pay it to her.

Slubberd

Many thanks for your reply Dunstonh. That is really helpful. Considering the amount gained over the last 11 years it's not enough to worry about.

Thanks again.