Taxation of a Company Owned Investment Bonds under FRS102 or FRS105

Company Bonds and Tax

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A client of mine is a director of a micro entity, end of year is 31st March, and the company holds an insurance bond.

I understand that I can prepare micro accounts, FRS 105, and show the insurance bond as historical cost and that the full gain (hopefully) would be taxed when the bond is surrendered.

However I'm wondering if I should prepare the accounts under FRS102 and show the bond at fair values. I have been advised that as the accounting basis is changing, I could spread the tax payable on the resulting gain over ten years but I cannot find any documentation confirming that this is allowable.

Also, would I then have to show the deferred tax in the accounts?

Thanking any help in advance.

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By johngroganjga
07th Oct 2016 12:22

You seem to be assuming that the unrealised gain recognised under FRS102 is taxable. Are you sure that that is the case?

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Replying to johngroganjga:
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By dawnduffy
07th Oct 2016 12:26

I've been advised by the wealth management agency that the client uses that the bond would be considered as 'complex' and so will be taxed on a fair value basis.

Otherwise, I had assumed that the unrealised gain wasn't taxable.

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