top slicing relief - why ?

top slicing relief - why ?

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havinga friday moment here 

individual has salary 65507

gain on overseas life policy 30k 20 years (nil tax treated as paid) - subject to income tax 

dividend income 500 

i have chucked this into my tax calculatiojn software and its taxed the 30k gain at 40% - to be expected

but has also given credit of 3800 for top slicing relief 

can anyone advise in laymans tems why top slicing relief exists here - i had (presumbaly wrongly) presumed that as the gain was 40% whetehr its full gain or 1/20 of gain i wouldnt have expected any relief to be given? i am probably mising something very obvious here ?

 

 

 

Replies (4)

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By cohen
01st Dec 2023 13:36

It's the personal savings allowance of £500.

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Replying to cohen:
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By rmillaree
01st Dec 2023 13:55

ahaaaaa you are a genius cohen that makes sense - cheers.

so practicably speaking they get 20 lots of £500 allowed tax free lovely jubbly sorely needed bit of damage limitation here

cant believe i didnt notice that the calc had even given the £500 savings zero rate as part of the calc so the clue was there.

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By Calculatorboy
04th Dec 2023 18:16

It exists because it makes sense

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Replying to Calculatorboy:
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By rmillaree
04th Dec 2023 18:57

it does indeed - in my ignorance i didnt even realise the income was deemed to be interest type income !!!! if i cant get the income type correct what chance do i have !!!

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