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  • FIRST POST
    • stibz
    • By stibz 7th Aug 18, 10:54 AM
    • 3Posts
    • 0Thanks
    stibz
    What to do ??
    • #1
    • 7th Aug 18, 10:54 AM
    What to do ?? 7th Aug 18 at 10:54 AM
    Hi, I am actuall trying to help a friend (really), because I see no sense in what he's doing, so looking for advice I can show him, to help maybe change his line of thought.
    He has an investment he says is a "With Profits Bond" shared acc with his ex-wife, has quiet a bit in it, but he tells me he can't use it, because if he takes it out, its due 40% tax if he does, so he won't touch it. I say well at sometime your going to have to take the hit of paying 40% tax, but he says he does not need the money, so it looks like it will never be used to his benefit, he's 67yr old btw. I try saying move it to where you won't have to take the 40% hit anymore, some other investment or the like.

    Seems silly to just ignor it and let the government have it when he is no more, but he won't listen, so I'm trying to look for options for him, that do make sense.
    Thanks for any advice (other than leave him to his fate lol)


    cheers
    Rob
Page 1
    • Malthusian
    • By Malthusian 7th Aug 18, 11:20 AM
    • 4,995 Posts
    • 8,075 Thanks
    Malthusian
    • #2
    • 7th Aug 18, 11:20 AM
    • #2
    • 7th Aug 18, 11:20 AM
    It sounds as if he has an onshore or offshore insurance bond. If the bond is onshore and he is a higher rate taxpayer (or the gain on the bond would make him one), he would pay 20% tax on the gain (not the whole proceeds), with 20% being deemed already paid within in the bond.

    If the bond is offshore and he is a higher rate taxpayer then he would pay 40% tax on the gain (as the bond grows largely free of tax).

    I say well at sometime your going to have to take the hit of paying 40% tax
    Not necessarily. He has the option of giving the bond to someone else who doesn't pay higher rate tax (e.g. a child or other beneficiary) who could encash the bond without a higher rate tax charge applying.

    Seems silly to just ignor it and let the government have it when he is no more
    How do you know the Government will get it? Has he had not made a Will? If not, does he have any children or others who would inherit under the intestacy rules?

    Who are the lives assured under the bond? If he is the only life assured then it will be automatically encashed on his death and there may be an income tax charge, but if there is another life assured still living at the time of his death, the bond will remain in force and will be part of his estate.

    Why does he still have a joint investment with his ex-wife? Have they had a Decree Absolute?
    • antrobus
    • By antrobus 7th Aug 18, 11:22 AM
    • 16,348 Posts
    • 23,234 Thanks
    antrobus
    • #3
    • 7th Aug 18, 11:22 AM
    • #3
    • 7th Aug 18, 11:22 AM
    Generally, if you are a basic rate taxpayer there is no income tax to pay when you cash in the bond, because tax has already been paid by the provider. If you are a higher rate taxpayer, there may be an additional tax liability on any gains you make. You can withdraw up to 5% of the initial capital amount invested into the bond each year without an immediate liability to tax. Tax is assessed when you close the bond, and if you are a basic rate taxpayer at that point there will be no further tax to pay, even if you were a higher rate taxpayer when you held the bond.

    https://moneyfacts.co.uk/guides/investments/with-profits-bonds/
    • stibz
    • By stibz 8th Aug 18, 9:53 PM
    • 3 Posts
    • 0 Thanks
    stibz
    • #4
    • 8th Aug 18, 9:53 PM
    • #4
    • 8th Aug 18, 9:53 PM

    Why does he still have a joint investment with his ex-wife? Have they had a Decree Absolute?
    Originally posted by Malthusian
    The joint account with his ex-wife, he says needs both to sign to draw anything out, he says, don't know if that IS correct, but he says so.
    Plus he has no family to leave anything to, If he had a will, bit sad, but it is what it is..
    • AnotherJoe
    • By AnotherJoe 8th Aug 18, 10:18 PM
    • 11,858 Posts
    • 13,831 Thanks
    AnotherJoe
    • #5
    • 8th Aug 18, 10:18 PM
    • #5
    • 8th Aug 18, 10:18 PM
    The trouble with helping friends with investments is that you are setting yourself up for failure. Anything at all goes wrong, its your fault, anything goes right, odds are it will be "oh well sure that was pretty obvious really" and you dont get the credit.
    • DairyQueen
    • By DairyQueen 8th Aug 18, 11:32 PM
    • 580 Posts
    • 958 Thanks
    DairyQueen
    • #6
    • 8th Aug 18, 11:32 PM
    • #6
    • 8th Aug 18, 11:32 PM
    The trouble with helping friends with investments is that you are setting yourself up for failure. Anything at all goes wrong, its your fault, anything goes right, odds are it will be "oh well sure that was pretty obvious really" and you dont get the credit.
    Originally posted by AnotherJoe
    Family are worse, Have you been eavesdropping on Mr DQ?
    • Malthusian
    • By Malthusian 9th Aug 18, 9:24 AM
    • 4,995 Posts
    • 8,075 Thanks
    Malthusian
    • #7
    • 9th Aug 18, 9:24 AM
    • #7
    • 9th Aug 18, 9:24 AM
    The joint account with his ex-wife, he says needs both to sign to draw anything out, he says, don't know if that IS correct, but he says so.
    Originally posted by stibz
    Probably true but that wasn't what I asked.

    Plus he has no family to leave anything to, If he had a will, bit sad, but it is what it is..
    Charities? Friends? Nephews / nieces? Is there really nothing or no-one he likes more in the world than the Government?
    • stibz
    • By stibz 10th Aug 18, 12:54 PM
    • 3 Posts
    • 0 Thanks
    stibz
    • #8
    • 10th Aug 18, 12:54 PM
    • #8
    • 10th Aug 18, 12:54 PM
    Probably true but that wasn't what I asked.


    Charities? Friends? Nephews / nieces? Is there really nothing or no-one he likes more in the world than the Government?
    Originally posted by Malthusian

    He has no family or children, If that is what you ment ?
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