Capital Investment Bond — Withdrawal Process

Overview

A Capital Investment Bond (CIB) is a single-premium, non-qualifying life assurance policy. Customers may request a full surrender or partial withdrawal at any time. All withdrawal requests must follow the regulated process below.

1. Identity Verification (ID&V)

Stage 1 (IVR / Initial):

• Full name
• Registered postcode

Stage 2 (Agent / Enhanced):

• Date of birth
• Registered mobile number or email address

If the customer fails Stage 2, escalate to the Fraud & Security team. Do NOT proceed with the withdrawal.

2. Account Confirmation

• Confirm which product the customer wishes to withdraw from (e.g., Capital Investment Bond, With-Profits Bond, ISA)
• Confirm the withdrawal amount
• For partial withdrawals: remind the customer of the 5% annual tax-deferred allowance

3. Tax-Deferred Allowance (5% Rule)

Policyholders can withdraw up to 5% of the original premium each year without an immediate tax charge. This allowance is cumulative — unused allowance rolls forward. Withdrawals exceeding the cumulative 5% allowance may trigger a chargeable event gain.

Key points to communicate:

• The 5% allowance is NOT tax-free — it is tax-deferred
• A chargeable event certificate will be issued if the gain exceeds the cumulative allowance
• Top-rate taxpayers should consider seeking independent financial advice before large withdrawals
• The customer's tax position depends on their individual circumstances

4. Compliance Statements

Before processing, the agent MUST offer to read the following compliance statements:

• Withdrawals from your bond may have tax implications. We recommend you seek independent financial advice.
• The value of your bond can go down as well as up. You may get back less than you invested.
• Partial withdrawals reduce the value of your bond and may affect future returns.
• A chargeable event certificate will be issued if the withdrawal triggers a taxable gain.

If the customer declines to hear the statements, record this in the case notes.

5. Processing the Withdrawal

1. Trigger the withdrawal process in the system
2. The customer will receive an email with a link to the digital withdrawal form
3. The digital form replaces the previous postal process
4. Once the customer completes and submits the form, the funds will be deposited into their registered bank account within 1–2 business days

6. Settlement & Payment

• Partial withdrawals: funds paid to the registered bank account within 1–2 business days
• Full surrenders: the final surrender value is calculated as at the date of receipt of the completed form. Payment within 5 business days
• If no bank details are on file, the customer must provide them via the digital form

7. Important Notes

• There are no exit fees on Capital Investment Bonds
• Early encashment of With-Profits Bonds may incur a Market Value Reduction (MVR)
• The minimum partial withdrawal amount is £500 (or the full remaining value if less than £500)
• Segment surrenders may be more tax-efficient for larger withdrawals — suggest the customer takes financial advice