Is assigning an investment bond a chargeable event?

Only if it is for money or money’s worth. A whole assignment for value (cash, or a valuable asset) is a chargeable event; a whole assignment by way of gift is not, and a part assignment by gift cannot be a chargeable event either (ITTOIA 2005 s.484; IPTM7360).

Does gifting a bond to my children trigger tax?

Not as a chargeable event. A gift assignment carries no income-tax charge at the point of transfer — but the new owner takes on the bond’s whole history, so the full gain (including pre-gift growth) is taxed on them when they later surrender it.

Investment bonds · Special cases

Assigning a bond: when it triggers a chargeable event (and when it doesn’t)

A gift assignment moves the bond with no tax now. An assignment for value is a chargeable event. For a non-charitable trust, the settlor is normally taxed while alive and UK-resident. Charitable trusts have a separate trustee charge.

4 min read · Last reviewed 1 Oct 2026

— In short

Assigning a bond triggers a chargeable event only when done for money or money's worth; a gift assignment carries no charge at transfer, but the bond's premium and withdrawal history goes with it. For a bond in a non-charitable, non-bare trust the settlor is normally taxed while alive and UK-resident, with top-slicing relief. Liable UK trustees cannot claim top-slicing relief and normally pay the trust rate, but the charitable cases in s.467(7) use the basic rate in 2026/27 (the savings basic rate from 2027/28).

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Calculators for this topic (4)

Whether an assignment triggers a tax charge turns on one thing: was it done for money or money's worth. The same transfer can be a chargeable event or tax-neutral, depending on the consideration. And once a trust holds the bond, who is taxed — and whether top-slicing relief survives — changes again.

The rule

A whole assignment of a bond for money or money's worth is a chargeable event (ITTOIA 2005 s.484; IPTM7360). “Money's worth” reaches wider than cash — a transfer in exchange for a valuable asset counts. But a whole assignment not for money's worth — a gift — is not a chargeable event, and a part assignment by way of gift (for insurance years from 6 April 2001) cannot be a chargeable event or an excess event either. A gift doesn't wipe the slate clean. The policy passes with its entire premium and withdrawal history, so the gain on a later surrender is worked on everything paid in and taken out since the start (ITTOIA 2005 ss.491–492) — including the growth before the gift. Who is taxed on it depends on where the rights went: an outright gift makes the recipient the beneficial owner (s.465(2)), but on a gift into a non-charitable trust the settlor normally stays the person liable (s.465(3)); for a charitable trust the UK trustees are liable instead (s.467(2)).

Trustees change who is taxed

Holding a bond in trust doesn't avoid the gain. While the settlor who created a non-charitable, non-bare trust is alive and UK resident, the gain is normally taxed on the settlor, at their own rates and with top-slicing relief (ITTOIA 2005 s.465(3); IPTM3250). UK trustees can instead be liable where the settlor died in an earlier tax year or is non-UK resident, where the trust is charitable, or where no one else is chargeable (s.467; IPTM3230). When trustees are liable, there is no top-slicing relief, since it is given only to individuals. The charitable cases in s.467(7) use the basic rate in 2026/27, changing to the savings basic rate from 2027/28. Other trustee gains use the trust rate under ITA 2007 ss.481–482. A bare trust is different: the beneficiary is treated as the individual liable and can claim relief on their own position. A gain on an event after a UK-resident settlor's death but in the same tax year is taxed on the deceased settlor (IPTM3240). So assigning a bond out of a trust to an individual beneficiary before the surrender can change who is taxed, the rate and the availability of relief. The full eligibility map is in Can trustees claim top-slicing relief?

Illustrative only — where a £40,000 gain before any TAR lands, by route

Assignment by gift: No chargeable event now — the gain passes with the bond
Assignment for money’s worth: Chargeable event on the assignor now
Surrender by non-charitable trustees — settlor alive and UK-resident: Taxed on the settlor, top-slicing available
Surrender by non-charitable trustees — settlor died in an earlier tax year, or non-resident: Trust rate on the trustees, no top-slicing relief
Assigned to an individual beneficiary first, then surrendered: Beneficiary’s marginal rate, top-slicing available

Those routes are illustrative — £40,000 is the raw gain before any TAR. They show where the gain lands and at what rate, not a computed tax figure; the amount itself is worked on the calculator below.

The common error

The frequent mistake is assuming a gift assignment triggers an income-tax charge — it doesn't, but it also doesn't reset the gain, so the recipient should know they are inheriting the whole history. The mirror error is assuming an assignment for value is tax-neutral “because no money left the bond” — the consideration itself makes it a chargeable event. Work the resulting gain on the chargeable event gain calculator and, where relief is in point, the top-slicing relief calculator.

ITTOIA 2005 s.484 (assignments) · ITTOIA 2005 s.465(3) (settlor liable) · s.467 (UK trustees) · ss.491–492 (the gain on the later event) · IPTM7360 · IPTM3250 · IPTM3230 · IPTM3240

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Common questions

Is assigning an investment bond a chargeable event?: Only if it is for money or money’s worth. A whole assignment for value (cash, or a valuable asset) is a chargeable event; a whole assignment by way of gift is not, and a part assignment by gift cannot be a chargeable event either (ITTOIA 2005 s.484; IPTM7360).
Does gifting a bond to my children trigger tax?: Not as a chargeable event. A gift assignment carries no income-tax charge at the point of transfer — but the new owner takes on the bond’s whole history, so the full gain (including pre-gift growth) is taxed on them when they later surrender it.
How is a bond taxed once it is in a discretionary trust?: While the settlor is alive and UK-resident the gain is normally taxed on the settlor, who can claim top-slicing relief (ITTOIA 2005 s.465(3); IPTM3250). Where the settlor died in an earlier tax year or is non-UK resident, UK trustees are taxed at the trust rate with no top-slicing relief (s.467; IPTM3230); a gain on an event after a UK-resident settlor’s death but in the same tax year is taxed on the deceased settlor (IPTM3240). The charitable cases in s.467(7) instead use the basic rate in 2026/27 and the savings basic rate from 2027/28, still without top-slicing relief for the trustees. Under a bare trust the beneficiary is taxed as the individual and can claim relief.

Sources

Based on ITTOIA 2005 ss.484, 465–467 and 491–492, and HMRC’s Insurance Policyholder Taxation Manual (IPTM7360, IPTM3250, IPTM3230, IPTM3240).

For planning and illustration purposes only. Verify all inputs against source documents. This explainer does not constitute financial or tax advice.