Do you have to pay tax on the withdrawal of investment bonds left in a will? 5 January at 4:58PM edited 5 January at 5:08PM in Deaths, funerals & probate 3 replies 213 views

jondurs

I have been trying to find out information on this subject but to no avail. I have contacted HMRC about this but they keep hanging up on me. The Investment company that the bond is with are being suitably vague - They say: 'There is not an option to transfer the bond – you would need to carry out a full surrender of this although we would recommend you seek advice first as to whether this may have any tax implications for you'. The bond was left as part of inheritance and I am named as second life assured. The bond was included as part of the will (which was not subject to inheritance tax). Would I be correct in thinking that income tax would not be payable on converting the bond to cash as income tax would not be payable on cash left in a bank account. Also, as the sole executor I am required to pay money to others mentioned in the will.

Daniel54

I can only give you a generic reply as a) I am not an expert and b) investment bonds come in different shapes and forms

However it is pretty clear that if you surrender the bond ie turn it into cash ,then this will be a chargeable event which would be reported to HMRC and may attract tax payable by the estate before distribution

Assuming you have the details you need of the investment ,then taking advice from an accountant or IFA could well be time and money well spent

i am not a named assured on the bond I am dealing with for probate.The issuer ( Royal London ) have confirmed to me that the bond proceeds will fall into the estate and will also give rise to a chargeable event for the estate ,to be included in the final tax return

i attach a link from the Pru but warn you much of this is pretty technical

https://www.mandg.com/pru/adviser/en-gb/insights-events/insights-library/taxation-uk-investment-bonds

macman

if the bond is not transferable, then surely the estate must encash it and transfer the legacy to you as a beneficiary? Any tax due is then the responsibility of the estate, not the beneficiary? There is no tax due on the legacy itself.

Nearlyold

You say you are a life assured on the Bond were/are you a joint owner of the Bond? What is the name of the Bond and which Company.