Glossary · UK
What is Partial Surrender (Investment Bond)?
Withdrawing a portion of an investment bond, triggering a potential chargeable gain for income tax purposes if the cumulative surrender exceeds the 5% annual allowance.
Full Definition
Investment bonds allow withdrawals of up to 5% of the original premium per year on a cumulative basis, without triggering an immediate income tax charge (deferred taxation). If cumulative withdrawals exceed the 5% cumulative allowance, a chargeable event gain arises. This gain is subject to income tax (not CGT), and top-slicing relief may reduce the effective rate. Partial surrenders are reported on a chargeable events certificate from the insurance company. Non-taxpayers and basic rate taxpayers can benefit from top-slicing to reduce higher-rate tax.
See Also
Disclaimer: Definitions are for guidance only. For decisions about your tax, savings, property or pension situation, always consult a qualified professional or refer to gov.uk.