Onshore investment bond tax-relief top slicing calc
Elgrandelulu
Member
Hi there,
I am trying to calculate the top-slicing relief for an onshore investment bond disposal split equally for two clients on the gain.
The gain of the bond is £80,000 and has been invested for 12 years with no withdrawals.
Client one has an income of £36,000, interest income of £220, dividend income of £3,600 and ISA income of £1,140.
Client two has an income of £47,000, interest income of £374 and ISA income of £1,250.
I need to work out what the tax relievable amount is on the gain using top-slicing.
Is anyone able to help with this at all please ?
Many thanks!
Comments
AF8 Coursework?
You can take the gain and divide it by 2 as the gain will be split equally if jointly held.
Then divide this figure by the number of years without chargeable event.
Add this figure onto their other income and it will tell you if they have a further tax charge.
If you google it there are plenty of calculators online to check your maths, and better explanations than mine you can use as references in the text.
Good Luck
Or just use the tools on Pru Tech site
I find this tool very useful as it calculates the top slicing relief and also shows you how the calculation was done: https://www.quilter.com/help-and-support/tools/chargeable-event-gains--income-tax-calculator.
I also believe the old 'short' method of calculating top slicing relief is no longer necessarily always reliable. More is explained in this article https://professionalparaplanner.co.uk/techzone/how-top-slicing-has-been-changed-for-ever-and-what-to-do-now/.
I believe Quilter tool only tells you the tax on the bond gain and doesn't allow for other tax issues created by gains.
So you might want to pop it in here - https://www.mandg.com/pru/adviser/en-gb/tools-calculators/tax-relief-modeller
And just about everything you need to know about TSR in 11 minutes
https://www.mandg.com/pru/adviser/en-gb/insights-events/insights-library/top-slicing-relief
Thank you all, I managed to do it in the end and send it off so hopefully its sufficient to pass!