Spot the difference: the tax treatment of onshore and offshore gains

When you encash an investment bond, any chargeable gain is potentially liable to income tax. For an individual, chargeable event gains are included in their total income and this can affect entitlement to personal allowances, age-related allowances and tax credits. Top-slicing relief can be used when working out any liability to higher or additional rates of tax, but is not used when calculating allowances or tax credits. Firstly, let's consider the order in which an individual's income and gains are taxed: Earned income  Savings income  Dividends  Chargeable event gains ...