Taxation of bonds in trust
I'm trying to get my head around the taxation of a bond and failing miserably.
The bond was established in 2004, 100 segments, £128,125 paid in. 49 segments were surrendered in 2016 (raised £101,945). Value now £131,924. There are two lives assured on the plan (one is a trustee).
The trustee wants to raise £25,000. If they surrender 10 segments, I've worked out the gain as £13,055. So far, so good.
This is where things to me aren't so clear. I've seen that £1,000 is tax free and there is 25% tax on the remainder (so £3,013.75). Is that correct? I understand that top slicing is not available.
Alternatively, is the 5% rule available to trustees? Would that avoid tax entirely? As no other withdrawals have been made, I assume that the full 5% allowance is available (if allowed), as the withdrawal in 2016 was a full surrender of segments?
Is there something else I'm missing that could be done to mitigate/avoid tax?
My apologies if I'm asking really basic questions, and would really appreciate some help - I think I've dealt with bonds maybe once in the last 20 odd years, and it has always been my weakest subject in exams!