On-Demand Events
Session 003: Calculating bond gains on exit
25 Feb 25 5 min read
Since the 2022 Autumn Statement there’s been an increased demand for information about onshore and offshore bonds. In response to this, we’ve designed six bite-sized sessions covering the basics of bonds and some of the more technical aspects like taxation.
This is the third session of the six-part series.
Barrie Dawson (Senior Technical Manager, M&G)
Neil Macleod (Senior Technical Manager, M&G)
In this session, we look at the chargeable event regime, calculating full surrender gains and excess gains, as well as full vs partial surrender considerations.
60 minute video (approximately) I Structured CPD accredited by CII and CISI
Learning outcomes
By the end of this session, you will be able to:
- Identify the different types of chargeable event gains
- Calculate the gains arising on bond withdrawals
- Evaluate the tax planning pros and cons of different withdrawal methods
Claiming your CPD
To claim your CPD certificate, test your knowledge with the questions below.
Write down your answers to each of the following questions and check your answers when you click to claim your CPD certificate on the link below
1. Jim invests £150,000 into a bond and Sue invests £200,000. They have been taking 5% monthly withdrawals from outset which will continue but both take an additional one-off £10,000 withdrawal across segments. Which of the following statements is false?
A) Both will incur an excess event of £10,000.
B) Sue’s excess event will be lower as she has a higher tax deferred allowance.
2. Bill set up a bond on 15 April 2015. On 25 February 2025 he takes a withdrawal in excess of his tax deferred allowance. What is the date of the chargeable event?
A) 25 February 2025
B) 6 April 2025
C) 14 April 2025
D) 5 April 2026
3. Anika invested £150,000 into a bond. Each policy year she has taken a one-off partial withdrawal across segments of £5,000. The ongoing adviser charge in place since outset is 0.5% of the original premium, paid monthly in arrears. How much unused tax deferred allowance will Anika have on the first day of policy year five?
A) £23,750
B) £20,250
C) £11,500
D) £10,625
4. Gio sets up a bond for £200,000 on 6 June 2018. On 25 February 2025 the surrender value is £268,000 and he surrenders 25 of his 100 segments. He also takes a partial of £60,000 from the remaining 75 segments. Which of the following statements is true?
A) His total gain for the 2024/25 tax year will be £24,500.
B) His total gain for the 2024/25 tax year will be £27,000.
C) He will have a £17,000 gain in 2024/25 and a £10,000 excess gain in 2025/26.
D) He will have a £17,000 gain in 2024/25 and a £7,500 excess gain in 2025/26.
1. Jim invests £150,000 into a bond and Sue invests £200,000. They have been taking 5% monthly withdrawals from outset which will continue but both take an additional one-off £10,000 withdrawal across segments. Which of the following statements is false?
A) Both will incur an excess event of £10,000.
B) Sue’s excess event will be lower as she has a higher tax deferred allowance.
2. Bill set up a bond on 15 April 2015. On 25 February 2025 he takes a withdrawal in excess of his tax deferred allowance. What is the date of the chargeable event?
A) 25 February 2025
B) 6 April 2025
C) 14 April 2025
D) 5 April 2026
3. Anika invested £150,000 into a bond. Each policy year she has taken a one-off partial withdrawal across segments of £5,000. The ongoing adviser charge in place since outset is 0.5% of the original premium, paid monthly in arrears. How much unused tax deferred allowance will Anika have on the first day of policy year five?
A) £23,750
B) £20,250
C) £11,500
D) £10,625
4. Gio sets up a bond for £200,000 on 6 June 2018. On 25 February 2025 the surrender value is £268,000 and he surrenders 25 of his 100 segments. He also takes a partial of £60,000 from the remaining 75 segments. Which of the following statements is true?
A) His total gain for the 2024/25 tax year will be £24,500.
B) His total gain for the 2024/25 tax year will be £27,000.
C) He will have a £17,000 gain in 2024/25 and a £10,000 excess gain in 2025/26.
D) He will have a £17,000 gain in 2024/25 and a £7,500 excess gain in 2025/26.
Before collecting your certificate, please take a moment to provide us feedback on this session, please email prudential.distribution.team@prudential.co.uk
Complete the form below and we’ll email your CPD confirmation to you. Please use the email address that you would usually use when contacting us.
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