HMRC has confirmed that, within the top-slicing relief
calculation, income tax personal allowances must be set, as far as possible,
against other income in preference to the life insurance gain, so that the
personal allowance cannot be used twice in the tax year. In a note, published
by the CIOT (and to be included in the next HMRC agent update) HMRC notes
that, of the 45,000 taxpayers who incur gains in a year, some 2,000 will
benefit from the availability of the personal allowance (where it otherwise
would be removed or tapered, because the taxpayer’s level of income).
Returns for 2018/19 are being reviewed by HMRC to ensure relief
has been applied correctly. For 2019/20 returns, taxpayers will need to
complete a paper return in other to get the correct calculation. From 2020/21
onwards, the self-assessment calculator will automatically account for the
changes, giving the correct amount of relief as part of the taxpayer’s online
return. This is in line with previous HMRC confirmation (in Agent
Update 79) that the FA 2020 s 37 changes to the method of calculation
would be applied to 2018/19 and 2019/20 ‘by concession’.
HMRC has confirmed that, within the top-slicing relief
calculation, income tax personal allowances must be set, as far as possible,
against other income in preference to the life insurance gain, so that the
personal allowance cannot be used twice in the tax year. In a note, published
by the CIOT (and to be included in the next HMRC agent update) HMRC notes
that, of the 45,000 taxpayers who incur gains in a year, some 2,000 will
benefit from the availability of the personal allowance (where it otherwise
would be removed or tapered, because the taxpayer’s level of income).
Returns for 2018/19 are being reviewed by HMRC to ensure relief
has been applied correctly. For 2019/20 returns, taxpayers will need to
complete a paper return in other to get the correct calculation. From 2020/21
onwards, the self-assessment calculator will automatically account for the
changes, giving the correct amount of relief as part of the taxpayer’s online
return. This is in line with previous HMRC confirmation (in Agent
Update 79) that the FA 2020 s 37 changes to the method of calculation
would be applied to 2018/19 and 2019/20 ‘by concession’.
