Liverpool Victoria

sabelu

My mother took out a with profits growth bond with Liverpool Vic it is now five years old so theres no MVA she can cash in it has not performed too well as original investment 15k has made round 3.3k over five years however surrender value is 14.7k and she has been advised of a possible tax liability of 2.7k. Surely when she has paid tax on the interest/income this is not correct?

EdInvestor

The money she has withdrawn has come from the capital invested in the bond, not from any income it earned.So no tax would have been deducted on the withdrawals, though the capital gains inside the bond (if any)will have been cut by 20% life company corporation tax (unreclaimable).

Is she a high rate taxpayer?

How much has she withdrawn over the period?

sabelu

No not a high rate tax payer and has received about 3k income over last 5 years so she basically lost nothing but gained nothing

dunstonh

Is she close to £20,900 a year income (including savings interest)? That is the only other tax level that can be affected by surrender. Although top slicing relief could end up bringing the liability down.

sabelu

No she is not

dunstonh

in which case no tax liability will exist. They issue the information for people to declare it on their tax forms if required.