Understanding Chargeable Event Certificates

[Randy Winkman]

My mother died in March of this year and my brother and I have been lucky enough to inherit her house and savings.

Now that we have got through the probate process we have access to 2 savings accounts she had with big, well know insurance/investment companies. I appreciate the amounts of money might well be very relevant to my question but for the sake of this first post I'll leave them out.

For both of them the certificate says "Income tax has been treated as paid". One adds to this "However, this is notional tax which is not repayable even if you pay no tax or pay tax only at the basic rate".

So my question is to ask that when my brother and I get the money - do we have to declare it for tax purposes? I've never filled out a tax form in my life but I guess I should start if I need to. My brother lives overseas.

Cheers.

[RAC1706]

It sounds like these are Onshore investment bonds, would be worth checking with the provider(s) if this is the case.

If they are, then the insurance companies would have paid corporation tax on any gains each year and so consequently HMRC deem that the bond holder has already paid basic rate income tax on any gains.

Whether any further higher rate tax is payable by your Mothers estate will depend on your Mothers other income in the year she died, but this will depend on the amount of the gain, how long the bonds had been held and whether any previous withdrawls have been made. Something called 'Top Slicing Relief' is available when calculating whether any further tax is due. All this assumes the bonds were still held in her name at the time of death and had not been assigned to you and your brother prior to her death.

The taxation of investment bonds can be complex, so worth you doing some research or maybe taking some advice if the amount warrants it.

Edited by RAC1706 on Wednesday 3rd December 14:13

[Randy Winkman]

Many thanks RAC1706. I appreciate you suggest more research but that's a great start for me. I'll look into exactly what type of investment they are further but I remember my late father (who worked 35 years in a bank) telling me that for them, the tax had already been paid each year and he didn't have to pay more. He specifically said to me that he had kept to the simple, safe option. And from an IHT point of view, that has been sorted via a lawyer though I dont think HMRC were specifically given details of the types of accounts they are. We have paid what IHT that HMRC said we owed though. Thanks again.