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    • pbear28
    • By pbear28 13th Feb 18, 1:36 PM
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    pbear28
    PIP miss sold or not.
    • #1
    • 13th Feb 18, 1:36 PM
    PIP miss sold or not. 13th Feb 18 at 1:36 PM
    Hi
    My wife was made redundant in 2006 and used part of her redundancy money to buy ISA's for her and myself from the Halifax.
    She bought 2 ISA's each, 1 investment, and 1 cash, and then we were told that there was another product that we could put more money into and it was just like a BIG ISA. This was called a personal investment plan and we could have it in joint names so we opted for it.
    Because of the collapse of the market about 5-6 years ago we lost most of what we invested and we withdrew some funds out of the PIP just to avoid loosing it all. Now wish to withdraw some more. We have read in the withdrawal docs that we could be liable for income tax on our withdrawal.
    We were told nothing about the fact we would be liable for tax. Both withdrawals together would equal the amount my wife initially invested so only leaving what we have gained in the account.


    Could anyone advise us ?
    To be honest we would just like to cash the lot in and get rid of it . This just seems so unfair..
Page 1
    • dunstonh
    • By dunstonh 13th Feb 18, 2:00 PM
    • 92,580 Posts
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    dunstonh
    • #2
    • 13th Feb 18, 2:00 PM
    • #2
    • 13th Feb 18, 2:00 PM
    Because of the collapse of the market about 5-6 years ago
    There was no collapse in the markets 5-6 years ago. The last two crashes were 2015/6 which recovered very quickly and 2008/9 which was a larger crash but recovered within 2 years.

    and we withdrew some funds out of the PIP just to avoid loosing it all. Now wish to withdraw some more. We have read in the withdrawal docs that we could be liable for income tax on our withdrawal.
    Pretty much the worst thing you can do. You know crashes are coming. They are a routine event. You just dont know when. Most crashes recover within 18 months. A loss in investments is not something you can complain about unless the investment was unsuitable for you in the first place.

    Now wish to withdraw some more. We have read in the withdrawal docs that we could be liable for income tax on our withdrawal.
    Unwrapped holdings are only subject to CGT on gains and Income tax in respect of dividends. In Scotland there is a part link but not in England & Wales.

    We were told nothing about the fact we would be liable for tax.
    I'm afraid you were. Whilst Halifax offered naff generally poor quality investments, you expect that from a bank. However, their documentation on tax was quite clear.

    Both withdrawals together would equal the amount my wife initially invested so only leaving what we have gained in the account.
    So, why do you think there will be tax?
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • fwor
    • By fwor 13th Feb 18, 3:00 PM
    • 5,993 Posts
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    fwor
    • #3
    • 13th Feb 18, 3:00 PM
    • #3
    • 13th Feb 18, 3:00 PM
    We were told nothing about the fact we would be liable for tax.
    Originally posted by pbear28
    I suspect that you are not remembering the situation accurately. I've had a Halifax PIP since 2004, and the documents provided at the time that I invested were very clear about tax liability. They also clearly stated that if I was unsure about the tax situation, that I should seek professional advice before cashing in.

    This point has been reiterated to me each time I have contacted Halifax to make a partial withdrawal.
    • pbear28
    • By pbear28 14th Feb 18, 11:47 AM
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    pbear28
    • #4
    • 14th Feb 18, 11:47 AM
    • #4
    • 14th Feb 18, 11:47 AM
    [QUOTE=dunstonh;73875230]There was no collapse in the markets 5-6 years ago. The last two crashes were 2015/6 which recovered very quickly and 2008/9 which was a larger crash but recovered within 2 years.

    Ok this is the one I was talking about not sure of dates.

    [QUOTE=dunstonh;73875230]So, why do you think there will be tax?


    We have read the advice booklet that Halifax supply with the withdrawal forms and it said we may be liable for tax if we withdraw more than 5% from all segments of funds.


    I am afraid we are not all that financially astute and usually take advice when given from someone who seems to be.
    We just wanted to put our money somewhere where it would do the best for us .


    So just to put our minds at rest.
    Would we be liable for tax on only our gain ?




    My wife is not a tax payer, her only income is a small company pension 2700 per year and both withdrawals have been for her use so put directly into her bank account.


    Any help appreciated
    • fwor
    • By fwor 14th Feb 18, 3:31 PM
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    fwor
    • #5
    • 14th Feb 18, 3:31 PM
    • #5
    • 14th Feb 18, 3:31 PM
    You would need to say how much your gain is. Simplistically, for each person, if the gain added to their income for the year is less than the higher rate income tax threshold, then no further tax should be due. If your financial circumstances are simple that's probably a good enough rule of thumb - if not you need to read and understand the booklet that is provided by Halifax with the withdrawal form.

    Whether it was a good investment or not will depend on exactly what funds you chose to make up your PIP, but mine has been Ok in terms of return.

    Just prior to the recent "correction" my plan stood at 260 for every 100 originally invested. Ok, you can do a lot better if you work at it (which I now do) but I don't consider that to be catastrophically bad.
    • dunstonh
    • By dunstonh 14th Feb 18, 3:40 PM
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    dunstonh
    • #6
    • 14th Feb 18, 3:40 PM
    • #6
    • 14th Feb 18, 3:40 PM
    We have read the advice booklet that Halifax supply with the withdrawal forms and it said we may be liable for tax if we withdraw more than 5% from all segments of funds.
    It can create a chargeable event but it doesnt mean you will pay tax. For example, if your gain after top slicing relief keeps you within the basic rate band, then there is no further tax to pay.

    Booklets are generic in nature and not personalised. So, its more a case you may pay tax but only if the gain takes you into higher rate.

    it also doesnt help that Halifax also used the PIP name for two different tax wrappers at different points in their history.

    Using the deferral allowance or surrounding segments are the two methods possible and both create different outcomes. If it is a part surrender then using surrender of individual policy segments may be more tax efficient but as we dont have the amounts, its hard to say.

    Basically, you take the gain on the segments you surrender. Divide it by the complete number of years the policy has been in force and then add that figure to her income. If she doesnt go into higher rate tax band, then there is no further tax to pay.

    It would need a significant gain and a large amount invested and being withdrawn to trigger a tax bill. Without figures, we cant be sure though.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • pbear28
    • By pbear28 14th Feb 18, 4:11 PM
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    pbear28
    • #7
    • 14th Feb 18, 4:11 PM
    • #7
    • 14th Feb 18, 4:11 PM
    the original investment was for 12000 in 2006
    We took out 8000 in 2015
    and 5000 now
    this leaves 5000 in the account after the latest withdrawal.


    Not a lot I know, but we know nothing about tax etc .
    • dunstonh
    • By dunstonh 14th Feb 18, 4:50 PM
    • 92,580 Posts
    • 59,889 Thanks
    dunstonh
    • #8
    • 14th Feb 18, 4:50 PM
    • #8
    • 14th Feb 18, 4:50 PM
    With those figures and her being a non-taxpayer, then there is no further tax to pay.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • pbear28
    • By pbear28 14th Feb 18, 5:09 PM
    • 11 Posts
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    pbear28
    • #9
    • 14th Feb 18, 5:09 PM
    • #9
    • 14th Feb 18, 5:09 PM
    Ok that's great.
    Many thanks for all your help. I will put it in the post office in future
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