Aviva Investment Bond where to put on IHT400 schedules?

sharrym

I'm struggling to find where I need to declare the income from this on the IHT forms, can anyone enlighten me?

My Dad had something called an investment bond which paid £100 per month to his account whilst alive and a lump sum upon death. I called the tax office probate helpline and they couldn't tell me where it needed to go on the forms and advised me to call Aviva. Aviva told me is it's an investment bond with a life element but couldn't say where it would fit on the tax form either. They did confirm it wasn't an annuity or pension. He suggested getting back to HMRC and asking them if they'd be happy for me to put it under the life insurance section with a note explaining why I put it there. He said the £100pm payment would also be something they'd have informed the tax office about. 

Has anyone come across this product and which schedule did you put it on?

It was not written in trust so is part of the estate and they've already paid out, only needed to fill in a form and send death cert. 

TIA. 

Keep_pedalling

Sounds like an Income bond which goes on schedule IHT 406.

sharrym

Keep_pedalling said:

Sounds like an Income bond which goes on schedule IHT 406.

Thanks for that. He paid a lump sum into it in 1999 and it's paid £100 every month since then and then there's the payout lump sum on death with about 23% on top of his original investment... There were management fees and there's mention of unit investments but very little else in the way of info. Does that sound like the income bond you mention? 

I've also had a 'chargeable event certificate' or 'death claim' from Aviva which talks about potentially paying tax on the current gain, 24 yrs of top slicing, that tax has been treated as paid and the amount treated as paid is several thousand.

Topsinger

My mum assigned a similar bond with Aviva to me just before she died so it is now deemed to be my income rather than part of her estate. I will have tax to pay and because it is a complicated calculation I have just engaged an accountant to do it for me. I have been quoted £400 plus VAT. These types of bonds are rare nowadays so there aren’t many people around who know how to deal with them. Aviva used to have technicians to make the calculations but not any longer.

sharrym

Topsinger said:

My mum assigned a similar bond with Aviva to me just before she died so it is now deemed to be my income rather than part of her estate. I will have tax to pay and because it is a complicated calculation I have just engaged an accountant to do it for me. I have been quoted £400 plus VAT. These types of bonds are rare nowadays so there aren’t many people around who know how to deal with them. Aviva used to have technicians to make the calculations but not any longer.

It'd be typical of my Dad to choose an obscure product. Thanks for the advice. I think I'd decided to get an accountant involved, if I can find one, £400 sounds better than the several thousand quoted by a solicitor!

Keep_pedalling

sharrym said:

Keep_pedalling said:

Sounds like an Income bond which goes on schedule IHT 406.

Thanks for that. He paid a lump sum into it in 1999 and it's paid £100 every month since then and then there's the payout lump sum on death with about 23% on top of his original investment... There were management fees and there's mention of unit investments but very little else in the way of info. Does that sound like the income bond you mention? 

I've also had a 'chargeable event certificate' or 'death claim' from Aviva which talks about potentially paying tax on the current gain, 24 yrs of top slicing, that tax has been treated as paid and the amount treated as paid is several thousand.

No, actually it sounds like an investment bond. After paying in a lump sum he would have been able to draw an income of up to 5% of the value of the bond each year tax free. Your father’s death has created a chargeable event which means any gain on the value of the bond is subject to income tax at the holders IT rate. Top slicing would reduce the amount payable and the insurance company work that out and deduct the tax at the basic rate. 

If your father’s income in financial year of his death made him a higher rate tax payer then an additional 20% of IT will be due. As it seems the lump sum falls into his estate then it should be put on IHT 410.

sharrym

Keep_pedalling said:

sharrym said:

Keep_pedalling said:

Sounds like an Income bond which goes on schedule IHT 406.

Thanks for that. He paid a lump sum into it in 1999 and it's paid £100 every month since then and then there's the payout lump sum on death with about 23% on top of his original investment... There were management fees and there's mention of unit investments but very little else in the way of info. Does that sound like the income bond you mention? 

I've also had a 'chargeable event certificate' or 'death claim' from Aviva which talks about potentially paying tax on the current gain, 24 yrs of top slicing, that tax has been treated as paid and the amount treated as paid is several thousand.

No, actually it sounds like an investment bond. After paying in a lump sum he would have been able to draw an income of up to 5% of the value of the bond each year tax free. Your father’s death has created a chargeable event which means any gain on the value of the bond is subject to income tax at the holders IT rate. Top slicing would reduce the amount payable and the insurance company work that out and deduct the tax at the basic rate. 

If your father’s income in financial year of his death made him a higher rate tax payer then an additional 20% of IT will be due. As it seems the lump sum falls into his estate then it should be put on IHT 410.

Thank you, I think he would still be within the basic rate so I just have to deal with the lump sum as part of the estate. I wonder if I need to inform his tax office of this or if Aviva would have informed them? 

Keep_pedalling

sharrym said:

Keep_pedalling said:

sharrym said:

Keep_pedalling said:

Sounds like an Income bond which goes on schedule IHT 406.

Thanks for that. He paid a lump sum into it in 1999 and it's paid £100 every month since then and then there's the payout lump sum on death with about 23% on top of his original investment... There were management fees and there's mention of unit investments but very little else in the way of info. Does that sound like the income bond you mention? 

I've also had a 'chargeable event certificate' or 'death claim' from Aviva which talks about potentially paying tax on the current gain, 24 yrs of top slicing, that tax has been treated as paid and the amount treated as paid is several thousand.

No, actually it sounds like an investment bond. After paying in a lump sum he would have been able to draw an income of up to 5% of the value of the bond each year tax free. Your father’s death has created a chargeable event which means any gain on the value of the bond is subject to income tax at the holders IT rate. Top slicing would reduce the amount payable and the insurance company work that out and deduct the tax at the basic rate. 

If your father’s income in financial year of his death made him a higher rate tax payer then an additional 20% of IT will be due. As it seems the lump sum falls into his estate then it should be put on IHT 410.

Thank you, I think he would still be within the basic rate so I just have to deal with the lump sum as part of the estate. I wonder if I need to inform his tax office of this or if Aviva would have informed them? 

If there is no higher tax rate involved you don’t need to do anything.