Chargeable Gains on Prudence Savings Account

Keep_pedalling

After a bit of research it seems that a chargeable event triggered by cashing in this type of product is treated as estate income, which is paid on the gain achieved in the investment. Estate income should not be subject to IHT, so if you included the gain on the IHT return rather than on SA 900 you have paid too much IHT.

numbersrule

Thank you for all your replies.
This has turned out to be a labyrinthine maze of tax scenarios.
I have spoken with a nice man at HMRC today and after consulting some of his more experienced colleagues the general consensus was that chargeable gains from this type of life assurance policy are treated as income for the deceased.
So now HMRC Income tax are going to send a paper self assessment form in the post because our uncle never had an online self assessment account.
So the outcome is that this has nothing to do with the estate but relates to income tax for our uncle.  This will have no impact because 'notional tax has already been treated as paid for the chargeable gain and our uncle's total income for the 2020-2021 tax year, including the chargeable gain will not exceed the higher rate threshold.
So it seems the already paid IHT doesn't enter into this now.
And it gets the thumbs up from my brother!