Chargeable Event

misscanon

I cashed in an investment bond with the Pru (it had a life insurance element ) and have been sent a chargeable event certificate. As I understand it, it will only incur a tax charge if the gain, when added to my annual income, takes me into the higher rate tax bracket - which it won't. Can anyone clarify this for me please? I rang HMRC but was told to just send in the Certificate.

The gain was £6,900 over 13 years.

Thanks

misscanon

Can anyone help please?

Thanks

Dazed_and_confused

I think you are correct.

Have a look at the Taxation section near the bottom of this info,

https://www.pruadviser.co.uk/knowledge-literature/knowledge-library/taxation-uk-investment-bonds/?icid=banner_articles

But if you are a basic rate payer you may, subject to any other savings income you have, be entitled to a tax refund as a result of having the chargeable event

Terry_Towelling

You are permitted to make tax-free capital gains up to £11700 in this tax year. Your gain is well below this exemption and the fact that you have made this gain over several years is no longer relevant to the CGT position.

I think the scenario you mention is a confusion of a few issues. If you already pay HRT on your working income, any gains above the exemption would be taxed at 20%. If you pay BRT, gains above the exemption would be taxed at 10%. These rates apply to non-property gains.

However, if you add gains in excess of the exemption to your income in excess of the £11850 personal allowance and this exceeds £46,350, you would pay 20% CGT on the portion over that amount.

Dazed_and_confused

The op isn't asking about a Chargeable Gain liable for Capital Gains Tax

It's a Chargeable Event liable to income tax.

There is more information here,

https://www.litrg.org.uk/tax-guides/other-tax-issues/savings-and-tax#toc-can-you-tell-me-about-life-insurance-policies-

Terry_Towelling

Dazed_and_confused wrote: »

The op isn't asking about a Chargeable Gain liable for Capital Gains Tax

It's a Chargeable Event liable to income tax.

There is more information here,

https://www.litrg.org.uk/tax-guides/other-tax-issues/savings-and-tax#toc-can-you-tell-me-about-life-insurance-policies-

Thanks. I think I've learned to leave any queries on taxation well alone now!

misscanon

Many thanks for your help.