Chargeable Event Gain on Death.

krysiatennis

My father owned a Prudential with Profit Bond. He died in March and a chargeable event gain was incurred  with 23 years of top slicing relief. The bond has now been cashed to the executor account.  I am confused if any tax is payable on this and who would be liable. 

Rules seem to have changed in 2020 on top slicing.  He did not need to complete tax returns for last few years as he was basic rate. 

If the liability is with my father the. I gather the relevant top slicing relief years would incur no tax liability. However someone has suggested that top slicing relief does not apply on death and the estate is liable for the tax. Can anyone enlighten me please. 

Marcon

Is this a UK or an International bond?

Rookie13

There are a few examples /  fictional illustrations of the tax implications for cashing these bonds in on the Pru website.

droid99

Did this question ever get answered?  I am in a similar position as Krysiatennis with a relative incurring a CEG on death, but there appears to be conflicting information on the web as to whether the Top Slicing relief is available for an Executor to claim in doing the deceased's tax return.  In my case, the deceased has never submitted a tax return before because income only ever incurred basic rate tax paid at source.  The CEG has placed the deceased in the higher tax bracket for the year of death.  i read the original 2018 posts on this subject but they were equally inconclusive, and tax rules can change every year. I need to know for the 2021/2022 tax year.  Two of the certificates are UK policies and non-qualifiying and a third is international.  I therefore realise that for the two UK policies basic rate tax is treated as paid, but not on the international item.  The total UK policy gain amounts to £137k whilst the Isle of Man item is £57K.

dunstonh

Did this question ever get answered? 

No.  As the OP never returned to the site to say whether it was an onshore bond or an offshore bond.   Normally, the details, when supplied would lead to one or more of the regulars here giving a response.  The OP didn't respond to Marcon's question and the thread died.

Another question would have been whether the investment bond was in trust or not.   Many are in trust and the taxation will change because of that.  Especially in respect of top-slicing relief.

And a further question would have been if there have been any withdrawals since inception using the deferment allowance, any policy segment surrenders or any top ups.

The more recent changes were more in respect of the personal savings allowance and tapering of the personal allowance and how gains interacted with those.

droid99

Ok - thank you.  In my case the investments were not held in trust and nor has there been any draw down using the deferment allowance.  Payments from dividend returns were made separately but never resulted in exceeding the basic rate tax thresholds.  There has been no segment surrenders of top ups.  My conclusion is that Top Slice Relief is applicable in my case of interest.

dunstonh

 Payments from dividend returns were made separately but never resulted in exceeding the basic rate tax thresholds.  

There are no dividends on an investment bond.    Whilst the funds internally may generate dividends, they are not treated as dividends at a personal level.   Any draws on the investment (even if it equalled natural yield) would fall under the deferment allowance (or exceed it) or be classed as policy [segment] surrenders.