Client has 'regular' income around £21k, chargeable event gains of £2500 with notional tax £500 and is over 75.
Submitted R40 and HMRC have not included the chargeable even gain in the calculation, which means that the age allowance is not reduced by 1/2 of £2,500. The accompanying slip says 'Your Chargeable event gain has been taken into account in this calculation'. Thus tax repayment made higher than I expected.
Looking through ITA 2007 it seems to me that chargeable event gains are part of 'net income' and therefore should affect the availability of the age allowance (s58). Am I wrong or are HMRC.
Presumably I should now write to HMRC saying they're wrong and offering my client's cheque for the excessive repayment? Hurrah!
jumpedup