What is a chargeable event gain?
It’s the profit you make on certain types of policies or investments, such as an Aviva Onshore Bond. It's usually calculated as the benefits paid out less the amounts paid into it, and is triggered by a chargeable event, such as taking money out of your bond.
Any gain you make on your bond may be subject to income tax. You’ll only pay tax on the gain if you already pay income tax at more than the basic rate or if the gain itself takes your income into the higher rate band.
What types of chargeable event are there?
You’ll have a chargeable event gain if you take out more than the 5% tax deferred allowance from your bond. This simply means you can withdraw up to 5% of your premiums each policy year without paying tax immediately – instead, it can be deferred to another chargeable event. If you don’t use it one policy year, the allowance can roll over into the following policy year.
There are other scenarios which can trigger a chargeable event gain too, such as death, full withdrawal, and some assignments. This tool is not designed for these scenarios, and you should speak to a financial adviser who can provide tax advice in those cases.
You can find out more about chargeable event gains in our guide to onshore bonds.
How our calculator works
To get your results, there are a few things our calculator assumes. Working out actual gains can be complicated, so you also need to know what won't be considered in your results.
Our assumptions and what to bear in mind
- You’re using this calculator for an Aviva Onshore Bond, with an account number starting ‘AV.’
- This calculator is designed to give you an indication of the gain you might incur when withdrawing money from an Aviva Onshore Bond.
- It gives results using the information you provide, and the actual chargeable event gain may be more or less than the values show.
- Results are based on current understanding of HMRC legislation and practice guidelines, but these might change without notice, and the tool does not consider all the possible circumstances that could have an impact on your personal tax affairs.
- The calculator will only consider the current position of the bond and will not account for pending transactions (including withdrawals and charges), the assignment of segments or any gains that are yet to be realised from previous transactions.
- The values are subject to change and cannot be guaranteed.
- The results are for information purposes only and you should not view them as financial or tax advice.
- We recommend that you seek financial and tax advice, especially where complex transactions exist within the bond policy history.
Chargeable event gain calculator
This calculator has been designed for use with Aviva Onshore Bond accounts starting AV and does not cover all tax implications.
The calculations will show a chargeable event gain for different types of withdrawal, and these will be explained alongside the results. If you're unsure how you wish to withdraw funds from your bond, we recommend you speak with a financial adviser.
Chargeable event gain FAQs
What information do I need to use the chargeable event gain calculator?
As well as the amount you want to withdraw, you’ll need to share the following information on your Aviva Onshore Bond policy:
- Current surrender value
- Remaining tax deferred allowance
- Number of segments remaining
- Current chargeable gain
All of this should be in your MyAviva account. Once you’ve selected your bond account, you’ll be able to find what you need by choosing the My options dropdown and going into the Product details section.
How do chargeable event gains work with investment bonds?
How do chargeable event gains work with investment bonds?
This depends partly on how you withdraw from a bond, and there are two main types of withdrawals:
Segment withdrawal (also known as individual policy withdrawal): Your bond is made up of a number of identical polices, sometimes called segments. If you cash in whole segments, the gain is generally the total value received (including previous withdrawals) minus the amount initially invested into those segments and any previous gains. For example, if a bond containing 10 segments is surrendered and pays out £10,000 and the premiums paid into those 10 segments were £4,000, the gain on the full bond surrender is £6,000. Each segment’s gain is £600.
Specified amount withdrawal (also known as partial withdrawal): Your policy accumulates 5% of your premiums as a deferred tax allowance every policy year. If unused this will roll over into the next policy year, up to a maximum of 100% (20 years). Any withdrawal (which includes adviser charges and discretionary investment manager charges) which goes over your accumulated 5% allowance will result in a chargeable event gain. Say you purchased a policy for £100,000, there would be cumulative 5% annual allowance of £5,000 (per year over 20 years). If you withdrew £8,000 in policy year 1, with a £5,000 allowance, you’d have a chargeable event gain of £3,000.
You can also withdraw using a combination of these methods, and the calculator results show an example of this.
You should talk to a financial adviser to be sure that you choose the type of withdrawal that best suits your personal tax circumstances.
You can find out more about chargeable event gains in our guide to onshore bonds.
Can taking money from my bond affect any benefits I get?
Yes, it could have an impact on allowances and certain benefits, such as child benefit and other means-tested benefits. If you receive any income-related benefits or allowances, you should discuss your situation with a financial adviser before taking money from your bond.
If you do not have a financial adviser, you can find one at unbiased.co.uk. An adviser may charge for their services.