Client died in year. 2 taxable life assurance policies matured, so chargeable gains in all of the BR, HR and AR band rates. In verifying the software topslicing relief calculation, I note that neither the "full gains" nor the "top sliced gains" hypothetical comparitor provide for the fact that the client made charitable contributions to boost her basic rate band in the tax year. Is the software right?
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HMRC did a webinar on this a few weeks ago. According to that - and I am not saying it is correct - you include the pension adjustment to the BR/HR bands but not gift aid when doing top slicing relief.
I had the exact same issue a number of years back.
You don't make the gift aid adjustment when calculating top slicing relief. In the situation I had, this meant that adding the top slicing gain actually caused the tax to fall. I confirmed at the time that this was correct, but the anomaly was so rare no-one could be bothered to fix it in tax law.