Hi there
I know I need to get some proper help & advice but wanted to get some background information before doing so, so please bear with me. My father in law is looking to partially cash in a Bond Policy which he has had for 19 years. He has never withdrawn beyond the 5% annual allowance and he's been quoted a Chargeable Event gain of approx £166k (between him and his wife, as it's in both names). I've read the HMRC and other notes available online and I believe that he can almost eliminate the whole potential tax liability through Top Slicing Relief.
He is a pensioner and basic rate tax payer as his pension income is only £14k pa (wife only £8k pa). If I add half of the gain of £83k to his pension he comes to £97k and so below the £100k threshold.
Having read the notes I believe Top Slicing Relief is available, as he is a Basic Rate Tax Payer. I've worked through the various online examples and by my calculations he would have zero (or almost nothing!) tax to pay.
Can anyone tell me if I'm on the right track with my thinking/interpretations before I look to fine tune the numbers via a professional adviser?
Also, given he may not have any tax to pay, would he still need to file anything with HMRC? (He hasn't worked for 20 odd years and so hasn't filed a Self Assessment for a long time!!) Would this be via a self assessment of via another mechanism?
Sorry, another question I have is that the insurer have provided two different scenarios; 1) Fully cash-in individual segments of the policy or 2) Partial cash-in taken equally across all in force segments...given the info above, does it matter which one is chosen? Both seem to result in similar chargeable event gains, but I'd admit I don't understand the difference...can anyone clarify what the difference between these two options are?
Thanks in advance
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