How will my windfall be taxed?

By THIS IS MONEY
Updated:

 

How do investors know whether building society windfalls are subject to Capital Gains Tax or Income Tax? SA, Billingshurst.

Maurice Fitzpatrick at Accountants Chantrey Vellacott DFK says: Where there is a shares handout it is only when you sell the shares that there is any tax liability. You are liable for Capital Gains Tax on the profits of the sale, subject to your annual CGT exemption currently £7,200 a year.

As for mutuals which are bought out for cash (as in the case of Bristol and West which was purchased by Bank of Ireland) where members get cash the money is once again classified as a capital gain.

The only circumstances where it could be taxed as income would be where members got interest income on an account as part of the payout deal, but I cannot recall any cases where this has happened so far. However each individual windfall situation is different and to check the tax position you must carefully examine the paperwork sent to you in the case of any windfall.

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