My mother has had an investment bond for about a decade, and in March this year she made a large withdrawal. This was the only time that any withdrawal or additional deposit had been made since the initiation of the bond, and was sufficient sum to trigger a chargeable event, which had been anticipated.
In May, she assigned the bond to myself (as a gift, for nil value as part of agreed IHT planning). No further additions or withdrawals have been made since.
In September I received the Chargeable Event Certificate, addressed to me.
We had wrongly assumed that the chargeable event is triggered at the moment of the gain, and had planned for the tax liability within my mother's affairs for the tax year to April 15. We did not know at the time that the gain is calculated at the end of the policy year respective of all movements within that year. Although I read the policy before these events I did not imagine that the tax liability would not stay with the investor who owned the asset during the time of the gain.
This leaves me with the problem of a potential tax liability that we had planned would accrue to my mother (and within a different tax year). It also seems to be against natural justice, since the gain was made wholly within the ownership of the bond my my mother, yet because the assignment was made prior to the end of the policy year, the tax liability turns out to belong to me. The extra tax liability is very inconvenient, and although my mother is perfectly happy simply to gift to me the amount eventually charged, it will then make a mess of our IHT planning.
Having read the policy I do not think that I can object to the timing of the certificate issue, but does anyone have experience of this matter and knows if it is possible for an insurance company to issue for example two certificates one to the policy owner before an assignment and one to the recipient after the assignment, pro-rata to the gains made by the respective parties?
Or of any other suggestion?
with thanks
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