Chargeable event gains are treated as the top slice of total
income. Where an individual has more than one gain assessable for
the same tax year, the gains are aggregated. If a policy has given
rise to deficiency relief for that tax year, see
IPTM3860, the relief is deducted in
calculating the aggregate.
For the purpose of determining total income, income arising from the following items is ignored
The key to the calculation is to determine a fraction of the gain, or aggregated gains, by dividing it by N, where this is the number of complete years as follows
If, however, the gain is from a foreign life insurance or foreign capital redemption policy, see IPTM3330, then
The use of the fraction is explained at
N cannot be reduced, in any of the above circumstances, to less than 1.
No top slicing relief is available for the annual gains that arise on ‘personal portfolio bond events’, see IPTM3650. Where such a gain arises, the ‘number of complete years’ entered on the tax return should be 1 to ensure that in practice no top-slicing relief is given on the gain. This is the figure that should have been shown by the insurer on the chargeable event certificate, see IPTM7165 and IPTM7130.
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