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Where Taxpayers and Advisers Meet

Annual Interest and Dividends on Investment Bond

robertiac1
Posts:28
Joined:Mon Mar 23, 2015 7:40 pm
Annual Interest and Dividends on Investment Bond

Postby robertiac1 » Sat Aug 18, 2018 12:49 pm

Apologies as this is a very naive question.

My wife's aunt has a investment bond (Standard Life International Bond).

Since moving into a care home her flat has been rented out, and an accountant does her self-assessment, and the rental income together with her pensions, puts her just into the 40% tax bracket.

Reports from the investment manager arrive on a regular basis, and the dividends are reinvested. No withdrawals have been made.

In the pre-submission self-assessment the accountant has included the figures for these bond dividends in tax return. My understanding is that the fund would already be deducting 20% tax.

Is it correct to include the figures because she is a higher rate tax payer?

Thank you
ps I note that the report is entitled "Standard Life International" without the words "Investment" "Bond" so the accountant may not realise the portfolio is within an investment bond.

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: Annual Interest and Dividends on Investment Bond

Postby maths » Mon Aug 20, 2018 5:09 pm

On the basis the "bond" is a non-qualifying life policy the underlying investment gains and income are simply reinvested by the life office and are not subject to tax on the part of the bondholder and such income/gains should not be returned on the bondholder's tax return.

Tax issues arise for the bondholder only on, for example a partial or total surrender, maturity etc.


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