Personal Investment Bond

greatcrested

My father took this out some 33 years ago. Some years ago he assigned it to me, such that it will pay out to me on his death, or earlier if I cash it in.

I understand that there may be income tax to pay if the cashing in pushes me into the Higher Rate income bracket, based on the

current value + any amount redeemed - original investment divided by number of years

I may wish to do this as I may want to use it to fund a property purchase, so am thinking of calculating how much to cash in this tax year to avoid the higher rate tax, and then again post April.


My question then is where to put it? The property purchase may or may not happen, so placing it in a savings account indefinately, earning little and being taxed, is not ideal.

Shares or investment funds will potentially create future Capital Gains Tax liability.

Any suggestions for a similar tax-efficient product I could consider?

Or can I 'bed and breakfast' it somehow to lock in the annual tax gap between my income and the 40% rate?

dunstonh

My question then is where to put it? The property purchase may or may not happen, so placing it in a savings account indefinately, earning little and being taxed, is not ideal.

There are no alternatives as you either accept risk of lower values or you accept low interest rates.

Shares or investment funds will potentially create future Capital Gains Tax liability.

Not if you leave it where it is.

Or can I 'bed and breakfast' it somehow to lock in the annual tax gap between my income and the 40% rate?

bed & breakfast was abolished years ago. Although sale and purchase of a different investment could do that but are the amounts likely to see gains of such a high nature to trigger CGT. And CGT doesnt apply to an investment bond, so would you just be making changes for changes sake?

Do you have a spouse/partner? You could assign the bond to joint ownership and then you split the income tax liability 50/50.