Taxation of investment bonds held in trust

Trustees administering an investment bond in trust must be aware of who is liable for the tax charge when a gain arises due to a chargeable event. It is important to note that various factors determine who is assessed for income tax on the chargeable gain. 

 When an investment bond is held in trust, gains are still taxed under the chargeable event regime, but who pays the tax depends on several moving parts, so understanding the taxation of investment bonds held in trust is essential.

This briefing note explains how investment bonds in trust are taxed, how different types of trust are treated, how the liability may fall on the settlor, trustees or beneficiaries and how onshore and international bonds compare. It is designed to help trustees and advisers understand where the tax bill lands, how taxation of investment bonds held in trust can vary by trust type and plan withdrawals and appointments effectively.