Skip to main content

This is a new service – your feedback will help us to improve it.

Posted Thu, 18 Jan 2024 22:33:18 GMT by
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
Posted Mon, 22 Jan 2024 14:59:21 GMT by HMRC Admin 5 Response
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
Posted Mon, 22 Jan 2024 20:06:28 GMT by
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.
Posted Thu, 06 Jun 2024 09:48:41 GMT by MB74 Breen
Hi, I received the chargeable events certificate for this but it is only in my name as trustee not the declared beneficiaries who are not named on it. If I send this does that mean that I will be taxed as doesn’t have their names or do I need the fund provider to resend a certificate for them?
Posted Fri, 07 Jun 2024 15:52:40 GMT by HMRC Admin 25 Response
Hi MB74 Breen,
As it is in your name yes, it is you who is liable for any additional tax if applicable.
Thank you. 

 
Posted Fri, 07 Jun 2024 15:54:42 GMT by HMRC Admin 25 Response
Hi Amy R,
Yes, you will be charged interest if reduced by too much.
Please see details here:
Understand your Self Assessment tax bill
Thank you. 
 
Posted Tue, 11 Jun 2024 09:02:29 GMT by MB74 Breen
Thanks for replies. Is there anything I can do as I was trustee rather than beneficiary? Ask the investment company for a new chargeable event certificate in names of the two beneficiaries as they won’t be liable for tax on this gain due to level of it?
Posted Thu, 13 Jun 2024 16:02:24 GMT by HMRC Admin 20 Response
Hi
You can but they may not issue a new one when the funds have already been paid out.
Thank you.

You must be signed in to post in this forum.