Chargeable event gain and CGT

fwor

I recently surrendered part of a Halifax Investment Plan, and received a Form S552 showing the amount of gain (£8550) and the amount of tax treated as paid (£1710).

As I have no regular income and no other significant capital gains this year, should I be able to reclaim the £1710 via my tax return?

xylophone

https://forums.moneysavingexpert.com/discussion/3970249 post 6

might be relevant?

dunstonh

As I have no regular income and no other significant capital gains this year, should I be able to reclaim the £1710 via my tax return?

A chargeable event is not treated under capital gains tax. it is treated under income tax.

If it is an onshore bond (which it probably is with Halifax) then you cannot reclaim the tax paid. It is taxed internally and treated as equivalent to basic rate. Lower or non rate taxpayers can claim nothing back. Higher rate would have to pay more.

fwor

Ah, right - it is confusing, and it does seem a bit strange to tax it as income, but if those are the rules then there's nothing I can do about it.

It's slightly annoying to have restricted my selling of part of the bond to stay within CGT limits, only to find that it's not subject to CGT!

If I sold enough of this type of bond in one year - and that was the only income I had in that year - could it put me in a higher income tax band even though I have no actual "earned" income during the year?

jem16

fwor wrote: »

If I sold enough of this type of bond in one year - and that was the only income I had in that year - could it put me in a higher income tax band even though I have no actual "earned" income during the year?

It could do but it would have to take you into higher rate tax so over £41k approximately. However it's not just as straightforward as the whole gain being added to your income so you would need to work this out.