Tax payable on investment bond

Hi, I took out an investment bond for my children in 2006. It was £10,000 and am now cashing it in fully for £17,000. The trust is registered. They are now over 18 and basic rate taxpayers. I am listed as settlor and they are the beneficiaries. I am a higher rate tax payer so wanted to know should it be paid directly by insurance company to them or does it matter if paid to me and I then distribute it. Also will they or I or both need to do any self assessment or other forms declaring the gain - will be £3,500 each in year which will be their entire savings claim each? Thanks

Hi

SAIM2430 advises Interest arising on an account held by an unmarried person under 18 is treated as income of his or her parent if the money in the account was a gift from the parent and the interest exceeds £100 - SAIM2430 - Interest: taxation of interest: children's accounts
As the children are now over the age of 18, the capital and interest is theirs.  The insurance company will be able to confirm whether the payment can be paid directly to your children.  
The insurance company will provide chargeable event certificates, showing the gain arising on the policy for each child.  
If the gain exceeds £10000.00, then a tax return is required to report the gain.  If below this figure, your children should send a copy of the chargeable event gain to:
H.M. Revenue and Customs
Pay As You Earn
BX9 1AS.

Thank you

Thanks for this, that’s very helpful. I had mistakenly thought they would each have to do a self assessment for the gain but won’t as gain only around £3,500-4,000 per child.