Offshore Bond Taxation

Rebecca_Tuck

Hi everyone!

We have a client with an offshore bond who wants to take an additional withdrawal of £75,000 net this tax year. Usual withdrawals are £60,000 p.a. (the full cumulative 5%).

I'm getting myself in a right muddle when it comes to calculating the potential tax / working back to the gross withdrawal needed, because he doesn't have any "income" in the traditional sense. Only tax-free State Benefits totalling c. £17,000 p.a.

In this instance, would he be able to use the starting rate band in addition to the standard personal allowance?

Any help greatly appreciated!

Becca

richallum

Yes. Personal Savings Allowance too although that may be restricted depending on the gain. The personal allowance could be at risk too depending on the gain.

Are you looking at the option of an excess withdrawal over the 5% vs full segment(s) surrender to see the most tax efficient option?

Rebecca_Tuck

Thanks Rich - It only has 10 segments (!) and the gains are massive, so ruled that option out fairly quickly!

Good point re: the tapering. I'll play with the figures including the starting rate and see how it looks!