investment bond top slicing relief

I have an investment bond taken out in 1996 for £20,000. This is in 40 x£500 units. I have not taken anything out of this bond which is now worth £110,000 My annual taxable income is £23,000 what tax will i have to pay on encashment?

Hi clive radford,
We can only provide general information / guidance in this forum and cannot comment on examples or scenarios.
Thank you. 

As your total gain is £90,000 over 28 years, under the rules of top slicing you add the annual gain of 90,000/28 = £3,214 per annum and add it to your income in the year to see if it takes you into higher rate bands. As the gain is already taxed at 20% you should have no tax to pay

I have similar. In laws want to withdraw £84k prudential bond they have had since 1996. Prudential says there is a £56k capital gain. They are both standard rate taxpayers whose only income is state pensions. Would they have to complete tax returns? Father in law is 94 and has dementia. Mother in law 90. They want the funds for care costs

Hi  John Webb

Yes. as the amount is over £10,000 a tax return is required - HS320 Gains on UK life insurance policies (2024)

Thank you