This section applies only if the bond is owned by an individual or individuals resident for tax purposes in the UK. If the bond is set up under trust, or owned by a company or partnership, please refer to your financial adviser for more information.
- If you are a basic-rate taxpayer you don't have to pay Income or Capital Gains Tax on your proceeds (see details below).
- If you are a higher-rate taxpayer, or you become one because of any increase in the value of your bond, you will have to pay tax on a chargeable gain.
- Standard Life pays tax on investment returns at the rates applicable to life assurance companies.
- You won't be taxed on switching between funds.
- For certain age related allowances these may be reduced if there is a gain for Income Tax purposes, but will not fall below your personal allowance.
Withdrawals and cashing In
- You can take tax deferred withdrawals each year of up to 5% of the total payments made into your bond, up to a maximum of 100% of the total amount paid into the bond. If you do not use your allowance in a particular policy year, you can carry it forward to a future year.
- If you are a couple paying different rates of tax, it may be more tax efficient for the partner with the lower tax rate to own the bond.
- If you take regular withdrawals amounting in any policy year to more than 5% of the total amounts paid into your bond, part of your benefit may be treated as a 'chargeable gain'.
- You may also have a chargeable gain if you cash in all or part of your bond. Chargeable gains are normally assessed on the bond owner.
What is a chargeable gain?
- A chargeable gain is generally the amount by which the value of your bond exceeds the amount paid into it. You will have to pay tax on a chargeable gain if you are a higher-rate taxpayer. However, the rate for this will not be more than the difference between the basic and higher rates of Income Tax.
You should consult a financial adviser for further information.
Please refer to the Key Features Document (CIB17) for full details on Tax.
Tax and legislation are likely to change. The information given here is based on our understanding of law and HM Revenue & Customs practice at today's date.
