Chargeable Event Gain in the Event of Death - Tax Implications?

My partner's father passed away earlier this year. Once the Grant of Probate was issued we have then been in a position to progress his life policy. The insurer, CIS and since transferred to Royal London, have been prompt and helpful.

They have issued a Chargeable Event Certificate, so our first point of contact was HMRC. Their advice was limited to the following:

"You can use the links within HS320 Gains on UK life insurance policies (2023)

If the actual gain itself is over £10,000, it will need to be a tax return that is submitted. any additional tax due is to be paid by the executor or the estate."

We've read through the HS320 guidance and we’re still not clear on how to proceed. We would welcome any advice and please feel free to pitch it as a dummies guide.

We had hoped the HMRC would have a calculator to which this information could be fed. Then this would guide us to what would be needed for a tax return, what the tax liability would be so that we could ensure the funds remain in the estate and how we progress a tax return.

I would imagine the following information will be useful to guide advice.

The policy is a CIS Platinum Bond Plus which is now owned by Royal London.

My partner's father was long retired, a basic rate tax payer and receiving income from a few pension plans. He's never completed a self-assessment or tax return and neither have either of the two executors of the estate. The executors are also the beneficiaries, and if relevant, are the son and daughter.

The policy had been in place for 21 years, the gain was in the region of £64,000 and the amount of tax treated as paid was around £13,000.

Comments

  • MCT56
    MCT56 Posts: 16
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    I saw your post some weeks ago and being in a similar position I was hoping someone on the forum may have contributed as I was struggling to understand how to work out any tax due. After some hunting around on the net I found a calculator on Quilter website so I used that and it seems to have worked it all out for me. I won’t be sending anything to HMRC until the new tax year starts in April and in any event it calculated that no tax was due. Hope this helps others in the same boat. Also there are examples on Canada Life website that may be worth having a look at but they were a bit harder for me to understand.
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