Chargeable Event Gains & Self Assesment

Mothman

My elderley mother recentently surrendered a couple of onshore investment bonds and the gains when added to her income were such that there would be no further income tax due as the policies had been held for many years. The chargeable event certificates state that the insurance companies will have notified the gains to HMRC, however can anyone advise if it will also be necessesary for my mother to register for and complete a self assesment tax return even though there is no additional tax to pay?

[Deleted User]

No - she won’t - unless she is a higher rate taxpayer in which case additional tax ‘may’ be due.

Dazed_and_C0nfused

If notional tax was deducted and she has paid tax on her normal income she may be due a refund though.

[Deleted User]

Dazed_and_C0nfused said:

If notional tax was deducted and she has paid tax on her normal income she may be due a refund though.

Notional tax is always deducted and never repayable on chargeable events. Are you looking at another scenario?

Dazed_and_C0nfused

Yes, if tax has been paid elsewhere and there is some 0% rate band available then the notional tax paid on the Chargeable Event pays some of the overall liability freeing up income tax to be repaid.  I think 

[Deleted User]

I thought that was what you meant but still don’t get it. I can’t think of an example where that would occur - you still have to leave the chargeable event deemed tax at 20%.

Jeremy535897

[Deleted User] said:

I thought that was what you meant but still don’t get it. I can’t think of an example where that would occur - you still have to leave the chargeable event deemed tax at 20%.

I agree. 

Dazed_and_C0nfused

Pension income £20,000 with tax deducted £1,500
Untaxed interest £300
CEG £1700 with notional tax £340

Total liability is £1,700.
Notional tax pays the first £340, income tax deducted pays the remaining £1,360.

Leaving £140 of the income tax to be repaid.

Dazed_and_C0nfused

Pension income £20,000 with tax deducted £1,500
Untaxed interest £300
CEG £1700 with notional tax £340

Total liability is £1,700.
Notional tax pays the first £340, income tax deducted pays the remaining £1,360.

Leaving £140 of the income tax to be repaid.

Jeremy535897

I don't think it works like that. There is an example here (the second example is relevant ):
https://www.canadalife.co.uk/technical-support/chargeable-gains-the-srsb-and-psa-briefing-note/

Dazed_and_C0nfused

https://ask.sage.co.uk/scripts/ask.cfg/php.exe/enduser/std_adp.php?p_faqid=30083