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If a taxpayer receieved interests on deposit which should be paid to the property developer if the complete date has not been delayed. Such interests will be refunded to the property developer upon completion of the new build house. In return, the property developer will reimburse the accommodation cost to the buyer of the house during the delayed period of time. The interests on the deposit are received in two different tax years and the accommodation reimbursements are reimbursed on a quarterly basis. Questions: 1. Does the taxpayer need to report this interest income in the self assessemnt return? 2. If yes to the question 1, then the taxpayer will need to pay tax on this interest. Any tax relief to the taxpayer in subsequent year when the interest refunding to the developer? 3. Any tax implication to the reimbursement of the accommodation cost? This is a purely a reimbursement of the actual cost incurred, does the taxpayer need to report these transactions? If yes, how to report it?

I have read HS320, it has defined the following terms. On maturity or full surrender A gain on maturity or full surrender should be shown on the certificate provided by your insurer, together with the amount of Income Tax treated as paid. If not, it’s calculated as Total Benefits (TB) minus (Total Deductions (TD) plus Previous Gains (PG)). If the above definition applied, in my example above, total premium paid is GBP27,000 and the total benefits is GBP26,000 (even if the total benefits has included GBP1,500 as dividend/interest), there is a chargable loss for this policy, there is no need to make entries in the Self Assessment and there is no need to disclose this event in any additional information, right?

Hi, Do you mean that the dividends and interest are added to the surrender value when calculating whether there is any gain or not? e.g When the life insurace policy is surrendered, the surrender value is £7,900, the dividends and interest are £200, the total premium paid is £8,000, in this case, there is a gain of £100 (£(7,900+200-8,000) and this has to be reported as income subject to 20% tax for a basic tax payer, it is not a capital gain, right ? But I have read another thread saying that the dividend and interests (£200) are to be reported as income under SA106(this is a foreign life insurance policy), the gain/loss on this policy is calculated as £7,900 minus £8,000, there is no need to report the loss of £100. Which version is correct?

Hi Admin 25, If the Notice of Policy Surrender has indicated there a surrender value £65,000, the total premium paid £68,000, there is no chargable gain, no need to report this, right? Does the tax payer require to report this event in any other information? If the Notice of Policy Surrender has also indicated there is a divdiend £2,500, this amount should be treated as dividend income or interest income (to be reported under SA106)? If the whole life insurace policy has covered 27 years but the taxpayer are not UK tax resident for the 26 years and only 1 year of the UK tax resident, then the dividend should be apportioned £2,500*1/27 = £93 and this should be reported as income, right?

How to calculate the chargable gain on a life insurance policy? If the tax payer pay a premium, says £1,000 each year for 27 years and this insurace policy cover a death coverage, say £30,000 (the beneficiary can get £30,000 if the insured passed away), the owner surrender the insurance policy at the beginning of year 28, the owner only received £26,000 when surrender this policy, does it mean that there is a chargable loss for this insurance of £1,000 (£26,000 (amount received) minus £27,000 (total premium paid)? Can the tax payer claim for the chargable loss against his other income such as saving income? If no, does the taxpayer requires to report this chargable event in the self assessment if it incurs a loss? Thank you.

Is the capital return received from a company (listed) taxable or not? This amount is not reducing the cost of investment and the description is capital return. The units and the cost of investment has not changed due to this capital return.