Investment Bonds

pants04

I have been left some investment bonds in a will. Managed through St James
They have to be split 10 ways and the total value is about 270k. The financial adviser have advised not to encash the total amount, but to split the investment and allow the individuals to choose if they want to "cash in" or not.
I need the money so will cash in my share. As a regular tax payer who lives in the Channel Islands does anyone have an idea of the tax implications??

masonic

How long has the investment bond been held, and has any income been taken from it? How far below the higher rate tax threshold are you, and will you be inheriting just one share in the 10-way split?

Albermarle

 The financial adviser have advised not to encash the total amount, but to split the investment and allow the individuals to choose if they want to "cash in" or not.

This advice is probably as much about self interest than anything else.
The more is cashed in the less they can charge.

poseidon1

pants04 said:

I have been left some investment bonds in a will. Managed through St James
They have to be split 10 ways and the total value is about 270k. The financial adviser have advised not to encash the total amount, but to split the investment and allow the individuals to choose if they want to "cash in" or not.
I need the money so will cash in my share. As a regular tax payer who lives in the Channel Islands does anyone have an idea of the tax implications??

You say you are resident in Channel Islands.

If this is Jersey where individuals face only a flat rate of  income tax at 20% and no CGT,   according to the following guidance there is no Jersey personal tax on encashment of investment bond gains - 

https://share.google/IRbD0zFLGxv2wCys0

However, the guidance relates to Pru's UK product that will have already been taxed in the UK. You do not mention whether your bond is onshore ( UK ) or offshore . Offshore bonds face no internal taxation at all.

Examples of sources of income upon which Jersey residents are definitely liable to income tax are covered below. 

https://share.google/OaxWNougZc6sj1rm3

Investment bonds are not listed, but perhaps this is not entirely definitive, in which case and assuming you are Jersey resident, you can make your own enquiries direct to the  Jersey tax authorities via the contact link provided. 

Yorkie1

Are you sure that the will doesn't instruct the executors to sell the shares and split the proceeds?

poseidon1

Yorkie1 said:

Are you sure that the will doesn't instruct the executors to sell the shares and split the proceeds?

Or that the bond was actually originally held in trust ( rather than derived from a deceased estate).  The 10 way split is suggestive of a possible trust scenario.

pants04

The will stated that all shares/investments (and money) to be split 10 ways (children and grandchildren) The financial advisor said to divide the investment into 10 incase any of the recipients wanted to retain their investment (and obviously others could cash in)
As far as I am aware no withdrawal has been made. Certainly not in the last 10 years.