Tax liabilities- initial charge bonds

[SnailsGalore]

Hi

Following bereavement, my DM owns about £38k in initial charge bonds (20 separate bonds).

She’d like to sell and put the monies in an ISA which she understands.

But we are struggling to work out the tax. She’s a basic rate taxpayer.

Pru tell us that her current tax deferred allowance is £10,600. But I don’t think that means withdrawal is tax free?

Does anyone know how we work out of any CGT or income tax would be due? Thanks.

Sounds like an onshore bond. There will not be any capital gains tax and maybe no income tax.

Work out the number of years the bond has been held for and the total gain. You can then top-slice.

If you divide the gain by the number of the years held you will have the annual profit. If you add this to income you can determine if further tax is payable.

You only pay tax if the gain makes her a higher rate tax payer.

pm me if you want to look at the numbers for her.

Thank you v much @FinancialGuru We have no idea how long my Dad had them before he died. The bonds were in joint names so now just with my Mum. I’ll have to ask the Pru. All they’d tell me (I have an LPA) was her deferred tax allowance, which isn’t terribly helpful.