Terminal bonus

Can anybody clarify if a terminal bonus can be withdrawn from an onshore bond spread over a few tax  years or does it have to be taken in one go on closure of the bond?
I can find lots of information on withdrawal of initial investment at 5% / year but nothing on the terminal bonus. 
It's rather a large gain which will result in loss of personal allowance if taken in one go so hoping to take over a few tax years. Is this even possible? Thanks 

Comments

  • dunstonh
    dunstonh Posts: 119,331 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    Can anybody clarify if a terminal bonus can be withdrawn from an onshore bond spread over a few tax  years or does it have to be taken in one go on closure of the bond?
    Terminal bonuses accrue daily.     Each surrender value will have some terminal bonus in it (if any).  

    It's rather a large gain which will result in loss of personal allowance if taken in one go so hoping to take over a few tax years. Is this even possible?
    This is why your offshore bond will be made up of a number of segments/policies.  Maybe 100.  Maybe even 1000.   You can surrender those segments individually. Its routine planning that advisers do all the time when moving money to other wrappers to use annual allowances or spending needs (or other).   You just need to find out how many segments/policies there are and then decide how many segments to surrender.    The WP fund itself is largely irrelevant in that.

    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • Upzeecreek
    Upzeecreek Posts: 120 Forumite
    Sixth Anniversary 10 Posts
    edited 16 December 2024 at 7:42PM
    Thank you for your reply.
    The initial investment/ bond value is to be taken across all the segments according to Aegon.
    There is no financial advisor involved here so why I'm asking the question.
    It's what's left invested( terminal bonus) that Im wondering is  the most tax efficient way to remove that from the bond ? Ie not lose personal allowance.
  • dunstonh
    dunstonh Posts: 119,331 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    The initial investment/ bond value is to be taken across all the segments according to Aegon.
    That is one method.  It is not the only method.   If you plan to draw out over multiple tax years, then that could be the wrong method from a tax point of view.     If you exceed the cumulative unused 5% deferral allowance it will trigger a chargeable gain on the whole bond.   Whereas policy segments will only trigger gains on those segments.  You can also mix and match the two methods.    

    Aegon do not give advice.  They take instruction.  They won't tell you which way is best.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • MeteredOut
    MeteredOut Posts: 2,881 Forumite
    1,000 Posts Second Anniversary Name Dropper
    edited 17 December 2024 at 10:47AM
    Is this Investment Bond (or similar)? My wife has one of these and is covered by these rules

    https://adviser.scottishwidows.co.uk/assets/literature/docs/1_337850-3.pdf

    But, that has no reference to terminal bonus, so perhaps what you have is different.
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