Chargeable Event Certificate

coffeedrinker

Thank you all for your responses - much appreciated. Sorry about the double posts kingstreet!

I now have my Chargeable Event Certificate. It states that:

Total Gain On This Event is: £17251 (close to my estimate).

Amount of Tax Treated As Paid: £3451

I'm a bit confused by kingstreet's second post - will I have to pay tax on any if this gain?
In tax year 2010-11 I will have earned £40,216
My tax code is 668L

Thank you!

claretmatt

The first thing you need to do is ring the insurance company and ask them why they are deeming the policy to be non-qualifying.

kingstreet

Agreed. We need to know if this has always been a non-qualifying policy, or if it was originally qualifying, what made it non-qualifying and when?

If we get confirmation it definitely is non-qualifying, I'll finish off the top-slicing calculation with the replacement figures.

coffeedrinker

My endowment policy became non-qualifying in 1998 due to arrears and re-instament. The company infomed me that I'd only be liable for tax if I am a higher rate tax payer. Will the gain affect this and if so how? Any idea? Thanks again.

kingstreet

coffeedrinker wrote: »

My endowment policy became non-qualifying in 1998 due to arrears and re-instament. The company infomed me that I'd only be liable for tax if I am a higher rate tax payer. Will the gain affect this and if so how? Any idea? Thanks again.

If the gain makes you a higher rate taxpayer, you can apply what's known as top-slicing relief, which is the calculation I was making such a pig's ear of earlier.

I've revised the numbers you updated yesterday, as follows;-

OP has taxable salary in tax year 2010-2011 of £33,531 (after personal allowances) and a chargeable event gain of £17,215 on the maturity of a life policy held for twenty-five years. The basic rate band for 2010-11 is £37,400.

The tax liability for 2010-11 before top-slicing relief is:
Salary (after pers allow) = £33,531
Chargeable event gain = £17,215
Total taxable is therefore = £50,566
Tax @ 20% on £37,400 = £7,480
Tax @ 40% on £13,166 = £5,266
Total liability £12,746

From this point, you apply the top-slicing relief and this is the bit I'm struggling with, as there is no calculator.

Can someone offer an opinion here?

The annual equivalent is £690 and when added to the taxable income, £33,351, it falls below the higher rate threshold, £37,400, so I'm getting a negative figure of £3,359. Does that mean there's no higher rate liability, or do I ignore the minus and continue to calculate?

I can't find any examples where this is the case.

The OP is going to have to get this checked by an accountant who have specialised software to do these calculations.