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— AccuracyHMRC’s own examples

HMRC worked examples, reproduced exactly.

HMRC publishes worked examples in its manuals. This page shows a selection of them: the ones we have put through our calculation engine, with every figure below compared with HMRC’s answer.

This page lists 16 HMRC worked examples across investment bonds, pensions and inheritance tax. Each one shows HMRC’s inputs, the figures our engine reproduces, and a link to the manual page.

— 6

examples

Investment bonds

Top-slicing relief on chargeable event gains, and how HMRC counts the years and dates the gain.

HMRC manual IPTM3850

Example 1 (Amanda): one chargeable event

Inputs

Type of policy
Onshore bond
Tax year
2022-23
Chargeable event gain
£50,000.00
Complete years the policy has run
5
Other income (non-savings)
£45,000.00

Figures reproduced

Total liability for the year (after the basic rate tax treated as paid on the gain)
£8,846.00
Annual equivalent (the gain divided by the complete years)
£10,000.00
Relieved liability on one slice
£846.00
Total relieved liability
£4,230.00
Top-slicing relief
£4,616.00
Personal savings allowance in the calculation on the whole gain
£500.00
Personal savings allowance in the calculation on the annual equivalent
£500.00

Checked by an automated test at 0-pence tolerance on every change.

HMRC manual IPTM3850

Example 3 (Mike): additional rate tax

Inputs

Type of policy
Onshore bond
Tax year
2022-23
Chargeable event gain
£150,000.00
Complete years the policy has run
5
Other income (non-savings)
£50,000.00

Figures reproduced

Total liability for the year (after the basic rate tax treated as paid on the gain)
£32,500.00
Annual equivalent (the gain divided by the complete years)
£30,000.00
Total relieved liability
£29,000.00
Top-slicing relief
£3,500.00
Personal savings allowance in the calculation on the whole gain
£0.00
Personal savings allowance in the calculation on the annual equivalent
£500.00

Checked by an automated test at 0-pence tolerance on every change.

HMRC manual IPTM3850

Example 2 (Amanda): two chargeable events

This example has its own test, because the shared test table holds one event per case.

Inputs

Type of policy
Onshore bond
Tax year
2022-23
First gain
£50,000.00
Complete years for the first gain
5
Second gain
£10,000.00
Complete years for the second gain
4
Employment income
£40,000.00

Figures reproduced

Total liability for the year (after the basic rate tax treated as paid on the gains)
£9,846.00
Total annual equivalent (the two annual equivalents added)
£12,500.00
Relieved liability on the combined slice
£346.00
Total relieved liability
£1,660.80
Top-slicing relief
£8,185.20

Checked by an automated test at 0-pence tolerance on every change.

HMRC manual IPTM7630

Simon: part assignment dated 6 January 2014

This example is about which tax year the gain falls in. The event itself happens on 6 January 2014, in tax year 2013-14. The gain is taxed in the tax year in which that insurance year ends. It has no tax figures.

Inputs

Type of event
Part surrender or assignment
Policy start date
10 June 2010
Date of the event
6 January 2014

Figures reproduced

End of the insurance year (the date that fixes the tax year)
9 June 2014
Tax year the gain is taxed in
2014-15

Checked by an automated test at 0-pence tolerance on every change.

HMRC manual IPTM7560

Complete years: a policy that begins 1 September 2018 and ends 31 August 2020

The day the policy ends counts as a full day.

Inputs

Type of event
Full surrender
Policy start date
1 September 2018
Date of the event
31 August 2020

Figures reproduced

Complete years used to divide the gain
2

Checked by an automated test at 0-pence tolerance on every change.

HMRC manual IPTM7560

Complete years: a policy taken out 17 January 2015 and fully surrendered 10 May 2019

On a final event, the years are counted from the start of the policy.

Inputs

Type of event
Full surrender
Policy start date
17 January 2015
Date of the event
10 May 2019

Figures reproduced

Complete years used to divide the gain
4

Checked by an automated test at 0-pence tolerance on every change.

— 8

examples

Pensions

The lump sum allowance and the lump sum and death benefit allowance after 5 April 2024, and the recycling of tax-free cash.

HMRC manual PTM174100

Example 1 (George): pension commencement lump sum

No transitional tax-free amount certificate.

Inputs

Lifetime allowance previously-used amount at 5 April 2024
£100,000.00
Pension commencement lump sum taken
£20,000.00

Figures reproduced

Lump sum allowance available at 6 April 2024
£243,275.00
Lump sum allowance remaining after the lump sum
£223,275.00

Checked by an automated test at 0-pence tolerance on every change.

HMRC manual PTM174100

Example 2 (Lilian): uncrystallised funds pension lump sum

A quarter of the payment is tax free if there is enough lump sum allowance. No transitional tax-free amount certificate.

Inputs

Lifetime allowance previously-used amount at 5 April 2024
£200,000.00
Uncrystallised funds pension lump sum taken (the whole payment)
£10,000.00

Figures reproduced

Lump sum allowance available at 6 April 2024
£218,275.00
Lump sum allowance remaining after the lump sum
£215,775.00

Checked by an automated test at 0-pence tolerance on every change.

HMRC manual PTM174200

Example 3 (Jocelyn): death before 6 April 2024

She died under 75 and a lump sum death benefit was paid before 6 April 2024, so the whole previously-used amount is deducted.

Inputs

Protection held
None
Lifetime allowance previously-used amount at 5 April 2024
£100,000.00

Figures reproduced

Lump sum and death benefit allowance available at 6 April 2024
£973,100.00

Checked by an automated test at 0-pence tolerance on every change.

HMRC manual PTM174200

Example 2 (Justin): serious ill-health lump sum, then death

He took a serious ill-health lump sum before 6 April 2024 and died under 75, leaving uncrystallised funds to his beneficiaries.

Inputs

Protection held
None
Lifetime allowance previously-used amount at 5 April 2024
£800,000.00
Lump sum paid on or after 6 April 2024
£300,000.00

Figures reproduced

Lump sum and death benefit allowance available at 6 April 2024
£273,100.00
Amount above the allowance
£26,900.00

Checked by an automated test at 0-pence tolerance on every change.

HMRC manual PTM174500

Example 1 (Petra): primary protection, lump sum death benefit

She held primary protection with no additional lump sum protection. A quarter of the previously-used amount would be more than the £375,000 cap on the deduction, so the cap applies.

Inputs

Protection held
Primary protection
Lifetime allowance previously-used amount at 5 April 2024
£1,610,000.00
Lump sum paid on or after 6 April 2024
£150,000.00

Figures reproduced

Lump sum and death benefit allowance available at 6 April 2024
£1,425,000.00
Lump sum and death benefit allowance remaining after the payment
£1,275,000.00

Checked by an automated test at 0-pence tolerance on every change.

HMRC manual PTM174500

Example (Krishna): primary protection, pension commencement lump sum

She held primary protection with no additional lump sum protection, so her lump sum allowance is fixed at £375,000 before the deduction.

Inputs

Protection held
Primary protection
Lifetime allowance previously-used amount at 5 April 2024
£145,000.00
Lump sum paid on or after 6 April 2024
£30,000.00

Figures reproduced

Lump sum allowance available at 6 April 2024
£338,750.00
Lump sum allowance remaining after the payment
£308,750.00

Checked by an automated test at 0-pence tolerance on every change.

HMRC manual PTM133850

Example 2: pension commencement lump sums paid at different times

HMRC’s 2013 example tests the combined lump sums against £15,000, which was 1% of that year’s standard lifetime allowance. The test uses today’s threshold of £7,500. £16,000 is above both, so the outcome is the same.

Inputs

Pension commencement lump sum just taken
£7,000.00
Lump sums taken in the last 12 months, added together
£16,000.00
Increase in pension contributions
£7,000.00

Figures reproduced

30% of the lump sum
£2,100.00
Does the increase in contributions exceed 30% of the lump sum?
Yes
Does the recycling rule apply?
Yes
Deemed unauthorised payment
£7,000.00

Checked by an automated test at 0-pence tolerance on every change.

HMRC manual PTM133860

Example 4: illustration of the cumulative basis

Contributions rise over three years by £3,500 in all, which is a significant increase on its own, but the recycling rule is not triggered.

Inputs

Pension commencement lump sum just taken
£35,000.00
Increase in pension contributions
£3,500.00

Figures reproduced

30% of the lump sum
£10,500.00
Does the increase in contributions exceed 30% of the lump sum?
No
Does the recycling rule apply?
No

Checked by an automated test at 0-pence tolerance on every change.

— 2

examples

Inheritance tax

How the residence nil-rate band and the nil-rate band are applied to an estate.

HMRC manual IHTM46070

Example 1 (Anthony): home and other assets left to his children

HMRC’s example is a death in 2020-21. The test dates the death 6 April 2027, when the nil-rate band amounts are the same, so HMRC’s figures still apply.

Inputs

Home (qualifying residence)
£300,000.00
Other assets
£190,000.00
Home left to children or other direct descendants
£300,000.00

Figures reproduced

Residence nil-rate band used
£175,000.00
Nil-rate band used
£315,000.00
Value on which inheritance tax is due
£0.00

Checked by an automated test at 0-pence tolerance on every change.

HMRC manual IHTM46070

Example 2 (Beatrix): part of the estate left to her husband

HMRC’s example is a death in 2020-21. The test dates the death 6 April 2027, when the nil-rate band amounts are the same, so HMRC’s figures still apply.

Inputs

Home (qualifying residence)
£100,000.00
Other assets
£900,000.00
Home left to children or other direct descendants
£100,000.00
Left to a spouse or civil partner (exempt)
£500,000.00

Figures reproduced

Residence nil-rate band used
£100,000.00
Nil-rate band used
£325,000.00
Chargeable estate value
£500,000.00
Value on which inheritance tax is due
£75,000.00

Checked by an automated test at 0-pence tolerance on every change.

— Method

How we check

Each example is stored in our code with HMRC’s inputs and HMRC’s answers. An automated test gives the inputs to the calculation engine and compares each result with HMRC’s figure. The tolerance is zero pence, so a result that is out by 1p fails.

The tests run on every change to the code.

The trust page explains the wider set of checks and lists the pension, bond and care test cases it shows, with their sources: calculation checks on the trust page.

— Scope

What this page does not show

These are HMRC’s examples, on HMRC’s facts. They show that our engine follows HMRC’s method for those cases. They do not cover every situation a client can be in, and passing them does not make any other figure right. Some of our other test cases, including ones we derive from the legislation, are listed on the trust page.

The tests run the calculation code directly. They do not test the screens or the PDF annex. Reproducing an example is not a statement by HMRC about our software.

This is a selection, not every example HMRC publishes. Other worked examples on the same manual pages, and elsewhere in HMRC’s manuals, are not in our test set and are not shown here.

We also leave out HMRC examples for events our calculators decline to price, for example some payments to people with Enhanced Protection, and published rates tables, which are not worked examples.

If you find a figure that differs from HMRC’s, tell us at info@paraplanai.co.uk.

For planning and illustration purposes only. Verify all inputs against source documents. This tool does not constitute financial or tax advice.

— Changes

Change log

Each date is the day we decided the change; the corrected figures reached the site in the release that followed.

  1. Inheritance tax: the residence nil-rate band is now applied before the nil-rate band, as HMRC’s example shows. Tax was not affected, but the split between the two bands was. For HMRC’s Example 1 the engine showed £325,000 of nil-rate band and £165,000 of residence nil-rate band used. HMRC’s figures are £315,000 and £175,000.

  2. Investment bonds: on a final event, the day the policy ends now counts as a full day when counting complete years, as HMRC’s manual says. A policy that runs from 1 September 2018 to 31 August 2020 now counts as 2 complete years. It counted as 1.

  3. Pensions: a lump sum death benefit paid before 6 April 2024 now counts in full as previously-used allowance, as HMRC’s example shows. For HMRC’s Jocelyn example the engine gave a lump sum and death benefit allowance of £1,073,100. HMRC’s figure is £973,100.

  4. Investment bonds: more than one chargeable event in a tax year is now worked by the sum-of-slices method, which reproduces HMRC’s IPTM3850 Example 2 (relief of £8,185.20). The earlier method gave £8,616.