Calculating top-slicing relief on life assurance gains

As a direct result of the taxpayer’s success in Marina Silver (TC7103) the legislation governing the taxation of chargeable event gains will change for such events occurring on or after 11 March 2020. Readers not familiar with the Silver case should see the articles ‘It’s all gone Pete Tong’ (Taxation 27 September 2017 page 14) and ‘Silver wins gold’ (Taxation 20 May 2019 page 8).

So what has changed? The draft clauses effect two quite distinct ‘changes’.

The first change articulates the interpretation approved by the First-tier Tribunal in Silver. In performing the calculations required by ITTOIA 2005 s 536(1) and s 537 the individual’s personal allowance but not any other relief or allowance is to be calculated as though the gain from the chargeable event is limited to the proportion of the...