HMRC amend life insurance top slicing relief guidance

Released 18 March 2021

HMRC have made an amendment to their Insurance Policyholder Taxation Manual (IPTM3820), which indicates that they will apply a Finance Act 2020 amendment provision from 2018–19 onwards and not from 11 March 2020 as specified in the legislation.

Finance Act 2020, s. 37 contains provisions to clarify the calculation of top slicing relief where the amount of a chargeable event gain took the taxpayer’s income above the amount at which the personal allowance is clawed back. Strictly, the amendment applies for event gains on or after 11 March 2020. However, although non-statutory, and following the decision in the case of Silver [2019] TC 07103, HMRC appear to allow back-dating (in the taxpayer’s favour) to the date of the case.

For further commentary, see Direct Tax ¶344-500.

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