The way in which tax is calculated on chargeable event gains is extremely complex and has been open to interpretation of the current legislation.
Silver v HMRC (TC07013)) which the taxpayer won. This case related directly to how higher rates of tax is paid on life insurance bonds and the interaction with personal allowances. As a result of this case, it now provides an opportunity to reassess gains and approach HMRC in order to obtain a tax repayment. Significant chargeable gains can often arise when an individual dies and the gains are crystalised, therefore, you may have a number of estates that may have overpaid income tax in the year of death of the individual.
Our Expertise
As the tax case was only heard at the First Tier Tribunal, HMRC are not bound by the decision and are not automatically issuing tax repayments to individuals that may be affected. However, we can advise that we have successfully challenged HMRC on this point and have obtained significant tax repayments for our clients.
Time Limits
There was a change in legislation in March 2020, which by concession will also apply to the 2018/19 tax year. As a result of this change any gains arising since 2018/19 should benefit from the beneficial tax calculation. However, HMRC are not applying the rules for earlier years therefore a claim needs to be made. In order to obtain a repayment for the 2017/18 tax year a claim needs to be made before 5 April 2022 although depending on specific circumstances it may be possible to look at previous tax years. Therefore, if you have been involved in any estates that received significant chargeable event gains resulting in the taxpayers income exceeding £100,000 please let us know as it may be possible to obtain a tax repayment.
For further information or advice regarding estate planning and tax liabilities, please contact Graham Poles
