Chargeable Event Gains Reporting Requirements

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Why do Chargeable Event Gains trigger reporting requirements when the gain is in excess of £10,000 even though they are within the charge to income tax rather than Capital Gains Tax? Seems entirely arbitrary to apply the CGT threshhold figure to such gains, and  also pulls people, often deceased, unnecessarily into the requirement to file, especially where no additional tax is due (and in many cases more likely to land a refund but hardly worth the individual's time/accountancy fees). 

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By Not Anonymous
16th May 2024 16:57

Which CGT threshold is £10,000?

Or have I misunderstood your point?

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Replying to Not Anonymous:
By rmillaree
16th May 2024 17:04

i am wholly confused too - that doesnt take much at this time of day with the pub beckoning i must admit

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By More unearned luck
16th May 2024 17:40

The reporting requirement (on the insurer to tell 'the inspector') in s552 ICTA 1988 applies if the gain exceeds 'one half of the basic rate limit'. Presumably that means £25,135 currently.

The insurer must issue a CEG certificate to the policyholder if there is a gain of any amount.

Perhaps this isn't what the OP is getting at.

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Replying to More unearned luck:
By More unearned luck
16th May 2024 18:04

The 1/2 BR threshold does not comfortably with MTD. Unless all gains are reported to HMRC any pre-population of tax returns with CEGs will be incomplete.

There are other MTD difficulties too. For example where a trust makes a CGT and the settlor is living, the settlor gets taxed on the gain despite not being the policyholder. I doubt that HMRC's systems will be able to pre-populate the correct return.

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By richard thomas
17th May 2024 11:00

Like others I am at a complete loss to understand what the OP is referring to by talking of “Chargeable Event Gains trigger reporting requirements when the gain is in excess of £10,000”, unless it is an oblique reference to the question in the online guide to when you “need” [sic] to send a tax return, question 6 of which asks

“Did you get more than £10,000 from dividends or savings and investments?”

An affirmative answer to which results in your being told that you do so need.

Not of course that it defines income from savings and investments, but I assume it includes them as CE gains are treated as savings income in Part 2 ITA.

The questions in the online tool also of course gloss over the fact that the legal requirement to notify chargeability in section 7 TMA provides that if you were within PAYE and not making a tax return, a £10,000+ gain on a UK life policy would not make you subject to the obligation to notify if there was no higher rate liability as the OP suggests is the case in question.

So if this is the trigger the OP refers to then the complaint is justified in the particular circumstances.

But it has nothing to do with, and no comparison can be made with, the CGT reporting threshold whether in the questions, s 7 TMA or s 8C TMA (which is not really a reporting threshold). The s 7 TMA “threshold” for CGT is of course rapidly reducing but at no time in the recent past or the near future will it be £10k.

Nor does the £10k limit have anything to do with requirements on insurers in s 552 ICTA as mul correctly points out (though the 1/2 BR limit does not reflect the PA and is therefore £16,850).

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David Ross
By davidross
20th May 2024 08:00

The OP should not have mentioned CGT - a common confusion as Chargeable EVENT Gains are an Income Tax matter

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Replying to davidross:
By FactChecker
20th May 2024 12:33

OP said: "Chargeable Event Gains trigger reporting requirements .. even though they are within the charge to income tax rather than Capital Gains Tax"
... so what's your point?

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