Tax on chargeable gain after death

NOWTHEN_3

Hello, wonder if anyone can help with this.

my FIL died in March 24 and we completed all the IHT and probate which had no tax to pay but he did have a bond (the figure for this was included in the IHT total)  for which we received a chargeable event certificate at the time, my wife sent this off to HRMC (a good while after) after speaking to them but we have recently had this returned to us with a self assessment form for the year up to the date of his death to complete.

My wife had already received a tax bill for her dad for the same year a few months after his death which she paid but does this mean the bond was not included in his tax bill for that year and there is more tax to pay now.

the gain on the bond was a good amount (it would take him from a basic rate to the higher tax rate if all included in one chunk) and it was over 21 years.

the certificate also had a figure for tax treated as paid which was 20% of the gain.

if there is tax to pay will top slicing relief apply to it?

thanks 

poseidon1

NOWTHEN_3 said:

Hello, wonder if anyone can help with this.

my FIL died in March 24 and we completed all the IHT and probate which had no tax to pay but he did have a bond (the figure for this was included in the IHT total)  for which we received a chargeable event certificate at the time, my wife sent this off to HRMC (a good while after) after speaking to them but we have recently had this returned to us with a self assessment form for the year up to the date of his death to complete.

My wife had already received a tax bill for her dad for the same year a few months after his death which she paid but does this mean the bond was not included in his tax bill for that year and there is more tax to pay now.

the gain on the bond was a good amount (it would take him from a basic rate to the higher tax rate if all included in one chunk) and it was over 21 years.

the certificate also had a figure for tax treated as paid which was 20% of the gain.

if there is tax to pay will top slicing relief apply to it?

thanks 

Since you have provided no raw data ( ie quantum of gain at death, years bond in force, withdrawals over the policy period and deceased's other taxable income in year of death) can only speculate whether top slicing relief may operate to either avoid a tax liabilty completely or there will be higher rate tax liabilty subject to credit for the 20% deemed taxed at source - see below


https://www.mandg.com/wealth/adviser-services/tech-matters/investments-and-taxation/top-slicing-relief/top-slicing-relief-facts


https://www.gov.uk/government/publications/gains-on-uk-life-insurance-policies-hs320-self-assessment-helpsheet/hs320-gains-on-uk-life-insurance-policies-2023#part-4--how-to-calculate-a-gain

You will see the various steps involved in calculating the gain after top slicing can be complex.

If neither you or your wife have ever completed a self assessment tax return before, it may make sense to get help from a tax accountant. Similarly if there is a fair amount of estate post death taxable income/ capital gains, in excess of the £500 de minimis.

NOWTHEN_3

poseidon1 said:

NOWTHEN_3 said:

Hello, wonder if anyone can help with this.

my FIL died in March 24 and we completed all the IHT and probate which had no tax to pay but he did have a bond (the figure for this was included in the IHT total)  for which we received a chargeable event certificate at the time, my wife sent this off to HRMC (a good while after) after speaking to them but we have recently had this returned to us with a self assessment form for the year up to the date of his death to complete.

My wife had already received a tax bill for her dad for the same year a few months after his death which she paid but does this mean the bond was not included in his tax bill for that year and there is more tax to pay now.

the gain on the bond was a good amount (it would take him from a basic rate to the higher tax rate if all included in one chunk) and it was over 21 years.

the certificate also had a figure for tax treated as paid which was 20% of the gain.

if there is tax to pay will top slicing relief apply to it?

thanks 

Since you have provided no raw data ( ie quantum of gain at death, years bond in force, withdrawals over the policy period and deceased's other taxable income in year of death) can only speculate whether top slicing relief may operate to either avoid a tax liabilty completely or there will be higher rate tax liabilty subject to credit for the 20% deemed taxed at source - see below


https://www.mandg.com/wealth/adviser-services/tech-matters/investments-and-taxation/top-slicing-relief/top-slicing-relief-facts


https://www.gov.uk/government/publications/gains-on-uk-life-insurance-policies-hs320-self-assessment-helpsheet/hs320-gains-on-uk-life-insurance-policies-2023#part-4--how-to-calculate-a-gain

You will see the various steps involved in calculating the gain after top slicing can be complex.

If neither you or your wife have ever completed a self assessment tax return before, it may make sense to get help from a tax accountant. Similarly if there is a fair amount of estate post death taxable income/ capital gains, in excess of the £500 de minimis.

Sorry for the lack of info, my wife has been dealing with it all but these were the details I knew in my head so will find the actual details out.

Thanks for the links, we will have a read of them.

There is some more tax to pay on interest in FIL accounts as it accrued before probate was granted which was in the next tax year and it is over £500 so we will have to do a self assessment for 24/25 for him as well.