Insurance bond withdrawls means testing income or capital



Hi Group

Senario a withithdrawl from a disregarded insurance bond for a person in reciept of income based JSA. £10,000 invested bond value has risen to £20,000 after 20 years. A withdrawl of £1,000 is to be made, so there is a return of £500 of capital and £500 of "growth".

Will the withdrawl be treated as capital or income or a combination of the two for means testing?

The reason i ask is because For UK tax
A withdrawl from an insurance bond creates a chargable event for tax purposes and therfore tax maybe payable. Part of the withdrawl is treated as return of capital (5% of original investment per year tax free)and any growth if there is any is chargable to income tax if the tax has not already been payed at the relavant rate.

Thanks for looking


Ask a Question

Want to reply to this thread or ask your own question?

You'll need to choose a username for the site, which only take a couple of moments. After that, you can post your question and our members will help you out.

Ask a Question

Similar Threads