Tax on Investment Plan

rguise1

Hi, I'm new to this website and hoping someone can advise me - hopefully I'm posting this in the right place! My mum who's 80 has had a Legal and General Single Premium Investment Plan for about 21 years and wants to cash it in. She put approximately £31k in originally and the surrender value now is just over £55k. She doesn't have any private pensions and no income other than her state pension but asked me if she would have to pay tax, and I don't have a clue! Could anyone advise me please? Many thanks

dunstonh

Gain is 24k (assuming no withdrawals) She gets top slicing relief which takes the gain down to £1,142 (assuming 21 years). You add that to her income and as long as it doesnt take her into higher rate tax, there will be no further tax to pay.

That assumes it is an L&G Investment Bond. if its an L&G International Investment Bond, then there will be tax.

It is also possible that there have been withdrawals based on the growth and timescale. They would need to be factored in depending on how the withdrawals were taken.

Do note that the investment bond is not included in any means tested benefits calculation. If she only has state pension, she probably gets some benefits (unless there is more capital but you dont mention any income/interest from those). If she surrenders this money, it will then be treated as capital for means test purposes.

rguise1

That's great - thank you very much for your advice. It is definitely an investment bond and I believe there have been a couple of small withdrawals (£200/£300) over the years but really nothing more than that - my mum doesn't spend much. And as far as I am aware she doesn't have any other income - she lives with a partner but their finances are completely separate and he owns the house in which they live. Thanks again - I'm very grateful.