Content
Leading article...
We can't go on like this...
General tax...
The name is Bond
Blessed are the givers
Excuses, excuses
PAYE the penalty
Silver and gold
Moving goalposts
Doctor, doctor...
Something phishy
Pension problems
Tax dot com
Unpleasant discoveries
Fair's fair (at last)
Chartered taxpayers
This year, next year
VAT...
Focus your mind
Flat rates aren't flat
Reverse the charges
Flapjack flash
Ready set ECSL
A lofty idea
Law items...
I want my lawyer
Not on my holiday
A grey area
No difference
| Not James Bond - Investment Bond. Bonds are "wrappers" which fund managers use to parcel up their products to sell to the public. Like any investment, they can go up as well as down, and like most investments, they have been having a rocky time over the last couple of years. This has highlighted one of the differences between bonds and straightforward investment in shares - the tax treatment of gains and losses. The glossy brochure will probably explain the tax treatment somewhere, but it often isn't at the front and it often isn't easy to follow. In general, bonds are chargeable to income tax, not to CGT. If the funds are invested in the UK, it's assumed that there will be some UK tax on the money while it's invested, so any gain is only charged to higher rate income tax - currently still the difference between 40% and 20%, but rising soon potentially to 50% less 20%. However, if you choose the time of encashment carefully, it's often possible to reduce this tax charge. If the money is invested offshore, any gain will usually be charged to income tax in full (20%, 40%, 50%) when the bond is cashed in, because it's assumed that there has been no UK tax in the meantime. That's if there is a gain - what about losses? If you are unlucky enough to have picked the wrong moment to buy your bond, the tax system has no sympathy for you. You cannot set a loss against your other income, nor even against your gains - so profits can be taxed at 40% and losses are usually not relieved at all. If you have any bonds that you are thinking of cashing in, it's worth checking first what the tax consequences will be. And if you are thinking of buying one, check out the tax position. We will be happy to advise you.  |
© Bayar Hughes & Co., 2010.