Page 28 - CPB March 21st

Taxation
What are the tax consequences during the period of the Care Property Bond?
Are there any tax consequences when a customer enters into The Care Property Bond?
There are no Inheritance Tax consequences when a customer enters into the Annuity Contract because the customer retains a contingent right to the property. The value of the net equity in the property therefore remains within the customer’s personal estate.
There should be no Capital Gains Tax when the customer enters into the Annuity Contract, provided the property is the customer’s main residence and therefore a tax relief known as Principal Private Residence Relief (PPR) applies.
The customer should take legal advice to ensure that PPR applies in his/her circumstances.
From the customer’s perspective, the annuity payments made under the Care Property Bond are not subject to any UK tax. Payments will be made directly to the customer’s registered care home. No charges or deductions will be made on this.
Shaw Insurance Group will be liable to pay corporation tax on
• the rental income received from the property, after deduction of allowable expenses such as letting and management fees, mortgage interest payment, property- related insurance and maintenance costs, and