Prudential Prudence bond

jeff_trev_peter1982

Hi, my dad invested 5k in a Prudence bond over 20 years ago and has not touched it. It has done very well and he has now withdrawn it. Can someone tell me, if he will be taxed on it? He is basic rate pensioner. Please see attached document from Prudential. 

jeff_trev_peter1982

Second document- 

LHW99

I am not particularly knowledgable about these, they are a bit old-fashioned now I think (parents in law had a couple back in the 00's).

However, from the second document, a "chargeable event" has occurred, as the bond has now all been cashed in.

Has anything been taken out previously? If not, then the bit about the accumulated (20x) 5% allowance on the bond is triggered.

Beyond that, I think the excess return is then added to income in the year it is taken, and tax is due if it pushes you into a higher rate bracket.

Hopefully someone can come in with a better interpretation.

jeff_trev_peter1982

Thanks for your response. No, my dad didn’t touch it at all until he recently cashed it in. Thanks