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Widows pays out £335m on redeemed loan notes

Scottish Widows has issued nearly £335m to more than 49,000 policyholders who took their demutualisation windfall as a loan note and cashed it in on the first redemption date.

Policyholders cashing in their loan notes on March 31 received a cheque or transfer into their bank account for the face value of the note, as well as a separate payment of interest.

A member who received loan notes worth £20,000 and redeemed £6,000 would receive an interest payment of £702.31.

Taking a windfall as a loan note allows policyholders to defer payment of capital gains tax by allowing them to redeem part or all of their loan notes at six-monthly intervals.

The next opportunity to redeem loan notes is on September 30. Holders wanting to cash in their windfall must submit instructions by August 31. The annual interest rate for the period has been set at 4.8 per cent.

Managing director of operations Ian Thompson says: “This option was particularly attractive to those qualifying members who expected their compensation to be more than the capital gains allowance. IFAs are in a perfect position to be able to advise their clients on a redemption strategy and ultimately on how to maximise their windfall payout.”


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