David Tipping walks through the steps to calculate top slicing relief under ITTOIA 2005, ss 535–537.
The taxation of investment bonds provides the essential context to the article, and so is outlined briefly at the beginning.
There is then an explanation of the circumstances in which the relief operates and how it is calculated, with a practical example to demonstrate.
Introduction
ITTOIA 2005, Pt 4, Ch 9 contains the rules relating to taxing gains from life insurance contracts and other investment policies. These policies are taxable only when certain events occur – known as ‘chargeable events’.
When a chargeable event occurs, any gain on the policy is taxed as the income of the policyholder. These sums, if significant, can push taxpayers into a higher rate of tax for that tax year. In order to alleviate
