In this video, Technical Connection's Niki Patel explains how bonds are taxed when held as trustee investments. 

    Building on her previous video on the taxation of investment bonds for individuals, she starts by looking at how tax is levied where discretionary or interest in possession trusts are concerned.

    Niki outlines the tax rates that apply in various scenarios where a chargeable event gain arises, including:

    • while the settlor is alive and UK resident
    • where the trustees surrender the bond in the same tax year as the settlor's death
    • where trustees surrender the bond in a later tax year after the settlor's death. 

    She covers the tax treatment of onshore and offshore bonds, when and how beneficiaries would be taxed, and where trustees might want to consider assigning the bond or segmented policies out of trust to the beneficiary.

    Niki also looks at bare trusts, as well as the special rules that apply where a parent settles into trust for their unmarried minor child. 

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