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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15902
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I have surrendered an insurance policy and have received a

Resolved Question:

I have surrendered an insurance policy and have received a Chargeable event certificate OCR.
How do I go about paying the tax due.?
What forms do I fill in?
Submitted: 2 years ago.
Category: Tax
Expert:  TonyTax replied 2 years ago.
Hi.

Can you tell me when you surrendered the policy exactly, how much the gain was, whether tax has been treated as paid at source and how many relevant years or years since the last chargeable event or since the policy started are shown on the certificate. Would you also let me know if you are the sole beneficiary of the policy (not necessarliy the life assured) and what your level of income was in the tax year the policy was surrendered.
Customer: replied 2 years ago.

There were two policies.

The first surrendered on 26 March 2014 the OCR received from Halifax on 15 April 2014 stating chargeable event gain £228 amount treated as paid £46.

The second surrendered on 21 June 2014 received from Halifax 28 June 2014 stating chargeable event gain £4,033 amount treated as paid £807.

Level of income £57K

Expert:  TonyTax replied 2 years ago.

Thanks.

How many years are shown on each certificate? Do you complete annual tax returns?

Customer: replied 2 years ago.

9 Years for first policy.

13 Years for second.

No I do not complete annual tax returns.

over the period that I had these I never took an income from them.

Customer: replied 2 years ago.

The first policy 9 Years.

The second policy 13 years.

Since taking out the policies I have never taken an income from them.

No I do not complete annual tax returns.

Expert:  TonyTax replied 2 years ago.

Thanks.

Take a look at HS320 here for information on how this type of gain is taxed.

If you were a 40% taxpayer in 2013/14, regardless of the addition of the 28 March 2014 gain, top-slicing relief will not apply and you will have an income tax liability of £46 (£228 x 40% - 20% basic rate tax paid).

If you are a 40% taxpayer in 2014/15, regardless of the addition of the 21 June 2014 gain, top-slicing relief will not apply and you will have an income tax liability of £806.60 (£4,033 x 40% - 20% basic rate tax paid).

If you think you have a tax liability for any tax year, you are supposed to register for self-assessment by 6 October 2014 following the end of the tax year. However, as your gain is so low and the tax liability so small, I suggest you call the tax office on the number here, tell them about the 2013/14 gain and ask whether it can be assessed to tax outside of self-assessment by the issue of a P800 tax calculation. If so, HMRC will also send you a payslip to pay the tax.

For the 2014/15 gain, they may be able to do the same again or you can register for self-assessment after the end of the tax year using a form SA1 which you can find here. An online version of SA1 can be found here.

I hope this helps but let me know if you have any further questions.

TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15902
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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