investment bond

Muni_2

Hi I have had a Norwich Union Capital Plan With Profits policy and a GA investment Bond since 1991 I am now in need to raise capital,Should I surrender or partially surrender the policys,would there be tax implication. Sorry for lack of knowledge!!! I have basically ignored this investment not knowing how to go about it. Does the initial FI who raccomended the investment have a duty to follow this trough (can't get hold of them at the moment)or which would be my best plan of action? I deeply appreciate any advice.Thank you

dunstonh

Should I surrender or partially surrender the policys,would there be tax implication.

Potentially. If you are close to higher rate or higher rate then it probably will do.

Take the gain of plan, add in any withdrawals you made and then deduct the amount you invested. Then divide this value by the number of complete years the policy was held (looking at 15 or 16 based on 1991). This value is known as your top slice. Add the top slice to your income and if it takes you into higher rate, you will be liable for some extra tax. If you are still in basic rate then there is no further liability. If it is joint, you divide the top slice in two and add it to each income.

NU normally provide the top slice value in their surrender confirmation so you only had to do the adding to income bit.

Does the initial FI who raccomended the investment have a duty to follow this trough (can't get hold of them at the moment)or which would be my best plan of action?

Only if their servicing agreement with you was to provide ongoing servicing. Back then it is highly unlikely.

Muni_2

Thank you so very much Dunstonh, I'm going to explain the situation in details: in march 1991after my husband early death and under FA raccomandation I took GA investment bond with profit for the amount of £8000.00 Since then i haven't added or taken anything from them.On the policy it indicates Additional benefits :life covers (what does this mean in lame terms?)Now in need of funds I wander if I should surrender o part surrender the policy. 1)Would I lose out on life cover if I surrender? 2)What about the possible reattribution still in negotiation. Just phoned to ask fund performance. The current fund value is 20770.00 with surrender value of 27200.00.
The other investment was also taken out in march 1991: Norwich Union Capital Plan with profits; amount invested £10000.00 No additions or withdrawals. Fund value £22560.00, surrender value £29780.00
I need 56000.00 to put into a new house, would I have enough?what should I do?Thank you kindly

dunstonh

1)Would I lose out on life cover if I surrender?

The life cover will be something tiny. Just enough to get it to qualify under the life assurance tax wrapper. Probably something like 101% of the value. Its not life cover in the conventional sense as you are perhaps thinking.

2)What about the possible reattribution still in negotiation

It looks like some time next year at the earliest now. So, surrender now and you are likely to miss out.

The current fund value is 20770.00 with surrender value of 27200.00.

The current fund value is missing the terminal/final bonus. You need to add that in and then compare it against the surrender value. If its the same, then there is no penalty.

Fund value £22560.00, surrender value £29780.00

Do the same as above.

I need 56000.00 to put into a new house, would I have enough?what should I do?Thank you kindly

The investments have done quite well for what they are. GA is just under 8% a year net and NU just under 6.9% a year net.

If the values are enough for you to get the house and the house is what you want then you go for it. You havent lost money and you have beaten savings accounts and now you can enjoy a purchase with the money gained. Thats what investing is all about.

Top slicing relief will be £760 on the NU and £1200 on the GA. So, add both of those figures to your income and providing it doesnt take you into higher rate tax, then you have no further tax to pay.

Muni_2

You are a real angel, things are starting to become clearer and if you have still some patience towards my poor knowledge I’m going to ask more…. If I left some funds in the GA would I still have a chance to benefit from the reattribution , say £5000?
About the terminal/final bonus: the figures I mentioned previously are the only one given to me, they are going to call me back on Tuesday I could ask then! My income is below £15000, they mention I would have to complete a tax form as they do not take tax out, is this right? Thanking you :A

dunstonh

If I left some funds in the GA would I still have a chance to benefit from the reattribution , say £5000?

Yes. However, the figure isnt expected to be very much. You could be looking at a couple of hundred.

My income is below £15000, they mention I would have to complete a tax form as they do not take tax out, is this right?

It is right to a point but also wrong. There is the potential for higher rate tax but no further liability for a basic rate taxpayer. As tax basic rate tax is considered paid already on the investments, you have no further liability. Therefore there is no further tax for you to pay and no need to notify HMRC. If they did send you a tax return, there is a box on there to put the figure but if you dont get one, you dont worry about it.

Muni_2

dunstonh wrote: »

Yes. However, the figure isnt expected to be very much. You could be looking at a couple of hundred.



It is right to a point but also wrong. There is the potential for higher rate tax but no further liability for a basic rate taxpayer. As tax basic rate tax is considered paid already on the investments, you have no further liability. Therefore there is no further tax for you to pay and no need to notify HMRC. If they did send you a tax return, there is a box on there to put the figure but if you dont get one, you dont worry about it.
Thank youuuuuuuuuuuu
Just one more..... I have received a share dealing service offer, would this be the best way to sell shares or is there onother cheap alternative that could give me better chance to get higher return when the shares are at higher level?