Top Slicing Foreign Income & Student Loan Repayment

SilverSix

Hi,

I've completed my self assessment (online) tax return to around 90% with a few minor details to finish off.

I have a fairly large gain from a foreign policy/bond I inherited which is treated as income rather than capital gains. This is eligible for top slicing and this calculation is complete and correct on my return.

However to my surprise and also horror for student loan contribution purposes this gain which is top slice-able for tax purposes is treated as a big old lump of income for student loan repayment, approximately £2,800 extra I was not expecting to and would be stretched to pay.

I have only started repaying my student loan about two years ago. This income/gain was accrued over 15 years. (I am only 23)

I don't think this is right that for tax purposes the income is broken down to an equivalent annual earning but ,as it seems, I'll have to make a large SLC contribution as if it was all earned over one year.

Any advice would be welcome. I've called a few times but a little too late in the evening and eventually get cut off in the queue.

Thanks,

Ben

SilverSix

Any suggestions at all?

Thanks,

Ben

jimmo

I am afraid you are going to struggle with this.

Top Slicing Relief is a relief from Income Tax and nothing else.

In other words it does not adjust your income, it only adjusts the tax payable on that income.

http://www.hmrc.gov.uk/manuals/iptm/IPTM3820.htm

Note especially the 3rd paragraph in that link.

Top Slicing Relief has no affect on age related allowances (which are calculated by reference to income) or tax credits (which are similarly calculated by reference to income).