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.

pants04

So....I am now waiting for the FA from St James Place  to contact me regarding my investment bonds. They are aware that I will want to cash in my IB and they don't seem to get back to me very quickly. Is this because the bond is more financially beneficial to them still invested rather than me cashing it in?
I am aware that there maybe tax liabilities when I cash in. Does anyone have any idea how long it will take once St James contact me back and I confirm for the bonds to be cashed, to actually receiving the funds?

poseidon1

pants04 said:

So....I am now waiting for the FA from St James Place  to contact me regarding my investment bonds. They are aware that I will want to cash in my IB and they don't seem to get back to me very quickly. Is this because the bond is more financially beneficial to them still invested rather than me cashing it in?
I am aware that there maybe tax liabilities when I cash in. Does anyone have any idea how long it will take once St James contact me back and I confirm for the bonds to be cashed, to actually receiving the funds?

Since the reccomendation was for the estate executor to split the bond into 10 different shares for each beneficiary to decide when/ if they wish to encash.  This would involve preparation and execution of 10 separate deeds  assigning policies to each beneficiary.

Clearly a time consuming process,  have you had notification from the life company that your policies are now in your name? Obviously you cannot sell what you do not yet own.

pants04

Thanks for you reply and obvious insight.
The FA has been furnished with contact details for all 10 beneficiaries, but we are yet to hear. As I presume he is a professional in this business, i would assume that it is something that he has done before and therefore knows the process. Whilst I wish to sell my share (and most of the other beneficiaries also do) i understand that there may be various processes to complete. At the moment my initial stumbling block is that none of us have even been contacted yet.

eskbanker

pants04 said:

So....I am now waiting for the FA from St James Place  to contact me regarding my investment bonds. They are aware that I will want to cash in my IB and they don't seem to get back to me very quickly.

pants04 said:

The FA has been furnished with contact details for all 10 beneficiaries, but we are yet to hear. [...] At the moment my initial stumbling block is that none of us have even been contacted yet.

Are you actively chasing SJP for answers?