Self assessment, income tax and capital gains

Geezer_BJ

I'm in the process of submitting self assessment for FY23-24

I had a chargeable event, as I cashed in part of an overseas bond. The gain was circa £25k. 

I expected that I would be liable for capital gains tax.
I have been told that as it was an overseas bond, I also have to pay income tax (at 40%) - wasn't expecting
I have also been told that I need to include this as income for student loan purposes - wasn't expecting

What I expected to be (and advised at the time) an owing of circa £3k to HMRC, I'm now looking at triple that. 

It seems a lot - has this been calculated correctly? would be grateful for advice, as I don't really understand and this is my first self assessment liability. 

Thanks

[Deleted User]

Geezer_BJ said:

I'm in the process of submitting self assessment for FY23-24

I had a chargeable event, as I cashed in part of an overseas bond. The gain was circa £25k. 

I expected that I would be liable for capital gains tax.
I have been told that as it was an overseas bond, I also have to pay income tax (at 40%) - wasn't expecting
I have also been told that I need to include this as income for student loan purposes - wasn't expecting

What I expected to be (and advised at the time) an owing of circa £3k to HMRC, I'm now looking at triple that. 

It seems a lot - has this been calculated correctly? would be grateful for advice, as I don't really understand and this is my first self assessment liability. 

Thanks

You need to seek professional advice - this is not an area for the pure amateur and you could end up making a mess of this to your cost. 

For example, a chargeable event on a bond has absolutely nothing to do with capital gains tax. 

What does the chargeable event certificate say?
Where is overseas?
What have you entered on the form and where have you entered it?

Gains arising from foreign policies should be reported in the return using supplementary pages SA106. Include the details of the gain under ‘Other overseas income and gains’.

Dazed_and_C0nfused

Geezer_BJ said:

I'm in the process of submitting self assessment for FY23-24

I had a chargeable event, as I cashed in part of an overseas bond. The gain was circa £25k. 

I expected that I would be liable for capital gains tax.
I have been told that as it was an overseas bond, I also have to pay income tax (at 40%) - wasn't expecting
I have also been told that I need to include this as income for student loan purposes - wasn't expecting

What I expected to be (and advised at the time) an owing of circa £3k to HMRC, I'm now looking at triple that. 

It seems a lot - has this been calculated correctly? would be grateful for advice, as I don't really understand and this is my first self assessment liability. 

Thanks

A chargeable event is different to a capital gain

Why did you think you would be liable for capital gains tax?  Why do you think there was a 40% tax rate for capital gains in 2023-24?

Can you explain where on the return you have entered the details of this chargeable event?

Geezer_BJ

Thanks - I have made a mistake. I should be including the gain as investment / saving income. As I'm a higher rate taxpayer, this is at 40% above £500
It was an overseas bond registered in Ireland. 
You're right, maybe I need to pay for some accountancy advice.

[Deleted User]

Geezer_BJ said:

Thanks - I have made a mistake. I should be including the gain as investment / saving income. As I'm a higher rate taxpayer, this is at 40% above £500
It was an overseas bond registered in Ireland. 
You're right, maybe I need to pay for some accountancy advice.

Hopefully the accountant will have some knowledge of top slicing relief in your case. 

poseidon1

Geezer_BJ said:

Thanks - I have made a mistake. I should be including the gain as investment / saving income. As I'm a higher rate taxpayer, this is at 40% above £500
It was an overseas bond registered in Ireland. 
You're right, maybe I need to pay for some accountancy advice.

The link below provides insight into the complexity of the calculations necessary to ascertain investment bond tax liabilities for higher rate tax payers and those on the threshold. A suitably qualified personal tax accountant should be able to navigate this morass  on your behalf.

In passing your original misapprehension as to how this product is taxed was so profound as to make me wonder how you happened upon it in the first place. Was it sold to you by an adviser or was it an unadvised acquisition?

https://techzone.abrdn.com/public/investment/top-slicing-relief