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Posted Wed, 06 Apr 2022 09:03:01 GMT by christinem
I had a couple of questions regarding HS320 (Gains on UK Life Insurance Policies) following the recent death of my Mum within the 2021/22 tax year (we haven't started probate yet). She had invested in 3 Life Assurance policies where she was the last and only life assured - these policies were taken out 24 years ago with no income ever being taken from them. Following her death the policies have been terminated and I have received a Chargeable Event Gain Certificate for each of them. For the purpose of this thread let's assume the total Income Tax due on the gains across all 3 is £30,000 (Tax has been treated as paid). In her will she leaves her estate to be evenly split between her 3 adult children (one is potentially a higher rate tax payer, one is a basic rate tax payer and the other is just under the personal allowance so doesn't pay income tax). From what I have read I don't believe Top-slicing Relief is applicable in this situation even though she hasn't taken an income from them over the last 24 years? 1) Assuming this Income Tax is due - do each of the 3 beneficiaries have to pay £10K each to HMRC for the 2021/22 tax year or does the tax burden fall on the deceased who had minimal income and has a large part of their personal allowance unused for 2021/22 and previous years? 2) If the tax falls on the beneficiaries - can this be offset against any unused tax free personal allowance and does the fact one of them is a higher rate tax payer change the amount? 3) How is this tax paid - does it need to be declared on a self assessment tax return for 2021/22 for each of the beneficiaries (after probate has completed) or is there another mechanism to pay it? Thanks!
Posted Fri, 08 Apr 2022 09:40:44 GMT by HMRC Admin 28

Please see the guidance and examples regarding Chargeable Events here:  

Read guidance on sending life insurance Chargeable Event Certificates    

HS320 Gains on UK life insurance policies (2020)

Thank you.
Posted Fri, 08 Apr 2022 12:09:24 GMT by christinem
I have already read HS320 which is why I am here asking questions. The other document you reference seems to be related to how Chargeable Event certificates should be sent from Insurers to HMRC so that doesn't answer my questions? Is it not possible to get a simple to understand answer to my questions for someone who doesn't have a degree in finance or our tax system? Dealing with the death of a loved one is stressful enough without having deal with all of this as well.
Posted Mon, 11 Apr 2022 14:19:19 GMT by HMRC Admin 17
I am sorry to hear of your loss.

If, as seems to be the case, your late mother was not a higher rate taxpayer, and if the combined
Chargeable Events did not render her liable to higher rate tax, no further action
re: the Chargeable Event certificates is required.

Thank you.

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