To ask for your advice? Very boring tax/financial advice question!

[Acapulco12]

I’ve been passed on some bonds (money) by my family, which I am very grateful for. The bonds are taxable and I would like to find out, before I cash in the bonds, how much tax I’ll need to pay on them.

My family think I am being U for asking a financial advice company to find how much tax I might need to pay, as I’ll need to pay them for advice. My family approached another company to ask for a quote and were quoted £6k. My family’s viewpoint is: HMRC will let me know how much tax I need to pay when I cash in the bonds, and if I do need to pay any tax, I’ll have enough from the bonds to pay.

My viewpoint is: I’d like to know how much tax I’ll need to pay (if any) before cashing in the bonds. For context, I pay basic rate (20%) tax. I’d just like to know how much tax I’ll likely need to pay before I start cashing in the bonds.

AIBU to want to find out how much tax I’ll need to pay before cashing in the bonds?

Ring HMRC they are very helpful

It will depend how much income you receive from the bonds and when its paid. Savings income is taxed at the same rates as your salary, apart from the first £1000 of interest in each tax year. If the income tips you into a higher rate band then you'll pay some at 20% and some at 40%

You can complete a dummy tax return, inputting all the information but not submitting it. This way the calculations are seen by only you and you can add/remove information as needed.

I've completed a tax return every year since 2003 and I've never paid anyone to do them for me; I find them pretty straightforward. My friend who earns the same as me pays someone every year and always ends up paying more tax than me!

Thanks very much for your advice, everyone. I’ll contact HMRC to see what they advise.

Has anyone been in a similar situation with bonds? If you have, how have you gone about it? Have you paid a financial advisor to help work out how much tax you owe, or just worked it out yourself?

It depends what type of bonds they are. I inherited some on my mum’s death. By cashing them in I created a “chargeable gain” for tax purposes. They counted towards my mum’s income in the year that she died. She had a number of different ones so in the end I needed help from an accountant to make sure we submitted everything correctly to HMRC. Can your family pass on the paperwork that goes with the bonds? You might find some info in there.

I would imagine this can be done with a little research as should be a factual answer HMRC can help with. If not it is a tax accountant you would need not a financial adviser - and in my experience that would cost you a lot less than £6k - more like £500.

Thanks so much for your help, everyone!

Just coming on to ask for some further advice. Some posters here have suggested contacting HMRC, but it looks like they just advise on filling out tax returns and general income tax queries. Do you know if they also advise on more specific tax queries like this one? Thanks!

@Acapulco12 yes they might be able to help with your specific query.

I think at the moment getting through to HMRC will be more than the usual nightmare as 31/01 is the deadline for people submitting their self-assessments. So there will be lots of people panicking at the last minute trying to sort things out. Bonds can be different types from simple fixed term at a set interest rate to more complex investment products and it very much depends who currently owns them ie whose name are they in and how are they being transferred to you. HMRC may be able to advise but I’d leave it a week or so before trying to phone unless it’s urgent.