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addey
Original Poster
59 posts
36 months
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Hi, after a bit of sdvice for my wife.
She has a very generous granny who has been paying into a Standard Life policy for a number of years - it appears to be a Variable Investment Bond and is in my wife's name. It has matured today and the final amount looks set to be paid into the account that the monthly payments come from, i.e. granny's account. I don't think she was really expecting this, and is now worried about the tax implications when she then transfers the money back to my wife. How will this be treated from a tax perspective? Does it matter that the account was in my wife's name, even though granny was paying the premiums? Hope that makes sense, any advice appreciated....
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Eric Mc
67,260 posts
134 months
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If the investment was set up in another person's name, then any money put into it by someone else will be looked on as a "gift" from the person making the payment.
If the person giving the money paid less than £3,000 per year to other people in the form of "gifts" , then the maney paid into the bond will be included in the £3,000 Annual Gift Allowance that a person can make and the gift will be igmored for Inhetitance Tax Purposes.
The bond is in your Mrs' name so any tax liabilities on its maturity will be her tax liability, not your granny's. However, whether the bond is taxable will depend on the nature of the investment vehicle and the tax rules that pertain to that type of investment on maturity. You should check with the investment company to find out what tax rules govern the situation.
Likewise, any interest added to the bond during its life wil be taxable in the hands of your Mrs, unless the investment belongs to some sort of tax exempt category, such as an ISA.
The bottom line is that you need to talk to the bond company to find out what type of investment it is and what tax rules pertain to it.
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ellroy
2,111 posts
94 months
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All good from Eric, but there is another exemption that could apply as regards IHT:
If the gift was regular from income and not affecting Granny's standard of living it will be IHT exempt without any cap as to the amount of the regular gifts.
Given the circumstances described I'd suspect that this could easily apply.
By the sounds of things it does sound like a regular premium qualifying policy of some kind. As such it is likely that as it has matured that there will be no further income tax liability no matter what the owners current tax position.
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