I have an estate with two purchased life annuities (5% tax free capital withdrawal, chargeable event on any excess) both of which are showing significant gains over the original capital. Will the estate get the 20% deemed tax deduction if the policies are encashed during the administration period or are the executors better off transfering them to the beneficiaries and they then encash and claim topslicing relief?
I recall some time ago I tried to report a similar type of gain on an Estate administration tax return and the software would not allow the 20%, but I can't remember if this was a software glitch or the actual position. Also, as I was very junior at the time, my supervisor finished the return off and I can't remember them giving me any feedback on this point.
In addition, the policies were initially taken out in the name of the deceased and their daughter (the Executor of the estate). So I am wondering if half the gain should be reported on the daughter personally anyway? Any guidance you can provide would be appreciated.