No Chargeable Event Gains Certificate from German Insurance Company

PeonyClementine

I was married and lived in Germany where I held 3 life insurance policies. Upon divorce, I returned to the UK where I am resident and pay tax.

As part of my divorce settlement, I had to transfer a portion of the policies to my ex-husband. This happened during the same year that the divorce was finalised (2017).

In the 2023-24 tax year I surrendered the policies and had the funds transferred directly into my UK bank account. These are subject to tax as Chargeable Event Gains and I am in the process of completing my tax return for 2023-24.

When I requested a Chargeable Event Gain Certificate the German insurance company that I had these policies with had not heard of and were unable to provide me with a Chargeable Event Gain Certificate. However, I did manage to get them to supply a document for each policy listing all of the premiums paid in and any pay outs in chorological order enabling me to calculate the chargeable gain for each policy. I have presented these calculations as a spreadsheet along with the documents from the insurance company and my workings out for any tax due after the deduction of the annual £6K allowance.

I attempted to compete an online tax form and successfully got all the way to the end and was then unable to complete the process as the documents exceeded the size allowed. I am now waiting for a paper form and have prepared paper versions of the supporting documentation.

I intend to use these funds to bring my mortgage down and need confirmation of the amount that I owe the HMRC in order to proceed as my current fixed rate is due to end in December, so I am very keen to stay on top of the entire process. My experience in the past has been that the HMRC are very slow and so I will need to badger them once my paper return has gone in.

My main concern is that HMRC will not accept the documents supplied by the German company, who have been hugely unhelpful, and that I will end up being taxed on the entire surrender amount, a substantial amount of which is made up of the premiums.

1. Does anyone have any experience regarding not having a Chargeable Even Gain Certificate?

2. What alternative documentation was successful in proving the Chargeable Event Gain and not being taxed on the premiums paid in?

3. Once the completed form and documents are submitted how quickly can I expect confirmation of tax owed? Or confirmation that my calculations for tax owed are accurate?

Many thanks

 

More_complicated_than_that

PeonyClementine said:

I have presented these calculations as a spreadsheet along with the documents from the insurance company and my workings out for any tax due after the deduction of the annual £6K allowance.

You mention the £6,000 annual allowance.  That was the 2023/24 capital gains tax exempt amoun that can be set against capital gains.  However, a chargeable event gain is actually subject to income tax and not capital gains tax.  So that means the £6,000 annual allowance is not relevant and instead the tax you pay will depend on your other income.  

[Deleted User]

Firstly - is there a chargeable event?
Secondly - is top slicing relief appropriate?
Thirdly - as above. This is income, not capital gains, and is entered in the main body of the return under:

 Other income not included in Supplementary pages. 

PeonyClementine

More_complicated_than _that: Thank you I stand corrected this is chargeable event gain and so the £6k deduction does not apply.

Ferro: Yes there is a chargeable gain as the policies produced a small profit after deducting the premiums paid in from the surrender value. I have looked at top slicing but I am completely bamboozled by it and struggling to understand how it works or if it applies to me. I have been wholly resident in the UK since the divorce and paid all my taxes to HMRC with nothing, apart from these policies, remaining in Germany. Is there an easy way to establish whether or not top slicing applies?

I do have proof of the premiums paid in as well as the surrender values, they are just not presented on a Chargeable Event Gain Certificate. If the HMRC won't accept this, and I am hoping that they will, is there any way that I can get through to the German company that this is an HMRC requirement?

[Deleted User]

PeonyClementine said:

More_complicated_than _that: Thank you I stand corrected this is chargeable event gain and so the £6k deduction does not apply.

Ferro: Yes there is a chargeable gain as the policies produced a small profit after deducting the premiums paid in from the surrender value. I have looked at top slicing but I am completely bamboozled by it and struggling to understand how it works or if it applies to me. I have been wholly resident in the UK since the divorce and paid all my taxes to HMRC with nothing, apart from these policies, remaining in Germany. Is there an easy way to establish whether or not top slicing applies?

I do have proof of the premiums paid in as well as the surrender values, they are just not presented on a Chargeable Event Gain Certificate. If the HMRC won't accept this, and I am hoping that they will, is there any way that I can get through to the German company that this is an HMRC requirement?

Top slicing should apply if the chargeable event value brings you into the higher rate band for tax I.e. were it not for this you would remain a basic rate taxpayer. 

Does this thread help?

https://forums.moneysavingexpert.com/discussion/6527072/top-slicing-relief-problems/p1