The Meaningful Money Personal Finance Podcast · Wednesday, August 5, 2026
In response to John's query about using 'top slicing' relief on his offshore bond, Pete Matthew clarified that top slicing is a method for calculating income tax on gains withdrawn from an offshore bond, not a way to avoid tax altogether. He explained that the tax is applied to the amount withdrawn above the 5% annual allowance, at the individual's marginal tax rate.
“You cannot use in using your words, used top slicing to prevent being taxed. I think you've actually alluded to, um, to prevent being taxed as if I've earned that whole amount in the year.”
“So it will only affect the level of income tax you pay rather than not being able to pay any.”
“Now, if you cashed in over 50,000 pounds with a profit, and you had no income, suddenly you're into higher rate tax. So what the what the bonds generally do, they they're into two segments. And you can cash in certain number of segments for yourself and say, okay, I'm gonna limit the amount of gain I'm gonna make in this tax year.”