Questions and answers

Kevin Simpson
Kevin Simpson
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KEVIN Simpson of Blue Trust answers some commonly asked financial questions.

Q I recently fully encashed an Investment Bond and I have now received a chargable event certificate from the provider stating that tax is due. I thought that there would not be any tax on surrender.

A The firm that you took out the Investment Bond with must provide a chargeable event certificate on surrender stating tax is due and also notify the inspector of taxes. This is because they are not aware of your total taxable income for that tax year. If you are not a higher rate tax payer or the gain does not make you a higher rate tax payer you will have no further liability to tax. In short a “Chargeable Event has happened” but they don’t know if a “Chargeable Gain” is due. If you are still unsure contact your Financial adviser, Accountant or the HMRC themselves.

Q I am having some serious financial problems at the moment and am a bit confused as to the differences between a debt management plan and an IVA

A A debt management plan is an informal agreement between you and your creditors whereby you agree to repay your debts based on your affordability. With this it must be noted that the creditors could change there mind at any point. An Individual Voluntary Arrangement (IVA)is a formal agreement and is a legally binding contract for all parties. I would however contact Citizens Advice Bureau in the first instance who will help make the decision as to which way is best for you.

Q I want the tax-free cash from my pension fund but can I leave taking the pension until later?

A Yes. But you need a personal pension which has an “income drawdown” facility, which allows you to take 25% of your pension fund without having to take any income and leaving the remainder invested until you decide to do this. You need to be over 55 years of age to do this. Before doing anything with your pension, speak to an independent financial adviser.

* For more advice call Blue Trust on 01744 752209.