The approach of the chargeable event regime, which is to charge
on a realisations rather than accruals basis, may benefit some
individuals. This could, for example, be so if the charge on gains
is deferred until after retirement when income is likely to be
lower than previously. But many individual taxpayers will suffer
disadvantage by being charged in a single year on gains that have
accrued over a period. Top slicing relief may assist. Its effect is
to reduce in some circumstances the rate of tax charged on the gain
by applying a spreading mechanism.
The relief cannot assist taxpayers already liable to tax at
the higher rate before the chargeable event gain is added to their
income.
There is no top slicing in computing income for the purposes
of calculating entitlement to age- related allowances, or child or
working tax credits. The full amount of the gain is included for
these purposes.
Special rules apply to ‘foreign policies’.
The relief is only available to individuals.
| Further reference and feedback | IPTM1013 |
