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Where Taxpayers and Advisers Meet

CHARGEABLE EVEN CERTIFICATE

MIC51
Posts:3
Joined:Tue Jul 27, 2021 5:23 pm
CHARGEABLE EVEN CERTIFICATE

Postby MIC51 » Tue Jul 27, 2021 5:35 pm

In June 2020, after 10 years of keeping it invested, I sold a stock and share investment and it was a policy from Insurer Scottish Widow Limited.

I then received a “Chargeable Event Certificate, as required under S552 ICTA1988” and I would like to know if I need to, as it would be the very first time in my life, do the Self Assessment form.

I am collecting all the related documentation, P60 etc., registered with Gateway for Self Assessment online etc..

I work part time with a salary below 12K . (£11168 as per last P60), and all my savings are in ISA and pension. I am 51 years of age.

The Chargeable event certificate 552 certificate says:
The amount of gain was £18457.00
AMOUNT OF TAX TREATED AS PAID ROUNDED UP £3692
TREATED AS PAID Y

Does it mean those taxes value £3692 have already been paid when I received the gain of £18457.00 at the moment of closing the investment last year?

Because I work part time with a salary below 12K I don’t pay income tax and:
Could you please tell me if a basic rate tax has been paid on the chargeable gain and therefore, me being a basic rate taxpayer, but I do not pay income tax because salary below 12K there are no further action required.

Does it mean there is no further action for me to do, just keep the certificate in a safe place,
or do I still need to do the Self assessment to show that I don’t go over my basic tax allowance?
or do I still need to pay £3692?. (and that is what worries me)

Could you please let me know the answer to my questions above? I hope they were clear to understand.
thanks
MIC51

pawncob
Posts:5090
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: CHARGEABLE EVEN CERTIFICATE

Postby pawncob » Thu Jul 29, 2021 10:14 am

Try this calculator. You haven't provided enough info to determine the gain.
https://platform.quilter.com/support-and-help/tools/chargeable-event-gains--income-tax-calculator/
With a pinch of salt take what I say, but don't exceed your RDA

MIC51
Posts:3
Joined:Tue Jul 27, 2021 5:23 pm

Re: CHARGEABLE EVEN CERTIFICATE

Postby MIC51 » Fri Jul 30, 2021 5:31 pm

Try this calculator. You haven't provided enough info to determine the gain.
https://platform.quilter.com/support-and-help/tools/chargeable-event-gains--income-tax-calculator/
I cannot find the calculator and what do you mean by RDA?
Thanks

pawncob
Posts:5090
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: CHARGEABLE EVEN CERTIFICATE

Postby pawncob » Fri Jul 30, 2021 7:23 pm

The link works for me.

Recommended Daily Allowance.
With a pinch of salt take what I say, but don't exceed your RDA

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: CHARGEABLE EVEN CERTIFICATE

Postby maths » Sat Jul 31, 2021 6:52 pm

The certificate should show whether tax is to be treated as paid on the gain ie normally tax will have been paid.

ben_power
Posts:81
Joined:Tue Feb 27, 2018 8:34 pm

Re: CHARGEABLE EVEN CERTIFICATE

Postby ben_power » Tue Aug 03, 2021 6:49 pm

It sounds like you sold/surrendered an investment bond.

Investment bonds pay basic rate tax at source (20%) on any growth achieved throughout the policy term. In your case the certificate states that the 'total gain' was £18,457 and the tax already paid was £3,692.

If you are a higher rate taxpayer then additional tax (20%) will be due. Given the provider of the bond doesn't know your tax position they issue the certificate and always state that 'tax may be due' which is correct. In your case, you will not have any further tax to pay as this is deemed to have 'already been paid'.

To check this you can do a basic calculation: Take the total gain and divide this by the number of full years you have held the bond giving you an 'average' annual gain. If this average annual gain pushes your income for the year into higher rate income tax you will need to report this and pay the tax.

You should not have any additional tax, even if you added the entire gain to your taxable income you wouldn't hit the higher rate tax threshold so you'll be fine.

keep the certificate but you shouldn't need to complete a tax return as there is no tax due.

MIC51
Posts:3
Joined:Tue Jul 27, 2021 5:23 pm

Re: CHARGEABLE EVEN CERTIFICATE

Postby MIC51 » Wed Aug 04, 2021 11:16 pm

Thank you , yes the calculation this time worked. Thanks for all your explanation and on the certificate there are only the numbers:
The Chargeable event certificate 552 certificate says:
TYPE OF EVENT: SURRENDER
AMOUNT OF GAIN ROUNDED UP: £18,457.00
AMOUNT OF TAX TREATED AS PAID ROUNDED UP: £3,692.00
TREATED AS PAID: Y
NUMBER OF YEARS: 10

For the entire10 years I have always been a non tax payer with a low income.
Taking the total gain of £18,457.00 and dividing this by the number of full years I have held the bond, 10 years, gives me an 'average' annual gain of £1845.70 This average annual gain does not push my income for the year into higher rate income tax , so I will not need to report this and pay the tax.

Is that correct?

I just need to keep the certificate in a safe place and no need to do a tax return.
Sorry for the recap. Just to see if I understood correctly all your replies.
thanks MIC51

ben_power
Posts:81
Joined:Tue Feb 27, 2018 8:34 pm

Re: CHARGEABLE EVEN CERTIFICATE

Postby ben_power » Mon Aug 09, 2021 8:31 pm

Your understanding is correct.

The actual calculation is a little more complicated but it wouldn't impact the end result.

No more tax to pay, nothing to declare.


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