JonF41

Many thanks.....

Hi, I am looking for some clarification regarding my With Profits Income Bond and the “5% rule”. I invested £10k in August 2000 and the current surrender value is £21k. I think that the 5% rule allows annual tax-free withdrawals of up to 5% without incurring any income tax liability. Also, and this is the key issue, for any year where the withdrawal is less than 5%, any unused allowance can be carried forward and there is no time limit on the carried forward allowance. Therefore, if my understanding is correct, in simple terms, after 20 years where there have been no withdrawals, full surrender of the bonds would be free of income tax (5% @ 20 years = 100%). Also, as a basic rate tax payer there would no Capital Gains liability? Confirmation/clarification much appreciated. Many thanks