Chargeable event gain calculator

On a full surrender the chargeable event gain is the surrender value, plus all withdrawals previously taken, minus total premiums paid and minus any gains already taxed on earlier excess events. A negative result means there is no gain; a deficiency arises only where gains on earlier excess events on this policy were taxed on the client, and it is never more than those gains (ITTOIA 2005 ss.540-541). The figure produced at this stage is before any TAR. Background: what a chargeable event gain is, deficiency relief and reporting a gain to HMRC.

TAR can affect qualifying onshore as well as offshore policies. Whether it is due can depend on relevant residence, beneficial ownership or assignments, rights held as security, and trust or estate history, so UK residence throughout the policy term alone does not settle the question. This tool does not calculate TAR: raw gain arithmetic stays available, while the comparison and optimisation outputs assume no TAR is due, say so beside the figures, and are withheld if you tick the TAR box.

Each policy year you may withdraw 5% of the premiums paid without an immediate chargeable event — unused allowance accumulates, and the pool caps once cumulative allowances reach 100% of premiums (the 20-year point). Withdrawals beyond the cumulative allowance create an excess at the end of that policy year, taxed in the tax year in which that policy year ends. The allowance defers tax; it does not remove it — everything washes through the final surrender computation.

Some insurers offer bonds written as a cluster of identical mini-policies (IPTM7230). Surrendering K of the bond’s S whole segments crystallises K/S of the total gain as a final event on those segments. Whether that costs more or less tax than a part surrender of the same cash depends on the bond's gain position, the unused 5% allowance, the client's income and tax year, and the complete years; neither route is better in the abstract (IPTM7330). The comparator prices the routes side by side on the basis that no TAR is due, and says so beside the figures.

The raw gain before TAR uses the same s.491 arithmetic whoever holds the bond: premiums, withdrawals and surrender value. TAR can still depend on beneficial ownership, assignments, security, and trust or estate history. Who pays the tax on the resulting gain also differs. The withdrawal comparator and segment planner above price the tax for an individual chargeable person: top-slicing relief is given only where an individual is liable, and the personal allowance, personal savings allowance and starting rate for savings are individual reliefs. Where UK trustees of a non-charitable trust are the chargeable persons the gain is charged at the trust rate with none of those reliefs, apart from the trust’s low-income rules: up to 2023/24 the first £1,000 of the trust’s income, gain included, is charged at the basic rate (ITA 2007 ss.491–492), and from 2024/25 nothing is due where that income is £500 or less, both amounts being lower where the settlor made other settlements (up to 2023/24 any that existed in the year; from 2024/25 only those with income charged at trust rates in the year, even if within their own tax-free amount, with some kinds of trust not counted) (s.24B) — run that case on the onshore bond tax calculator or the offshore bond tax calculator, which take the chargeable person as an input. While the person who created a non-charitable trust (other than a bare trust) is alive and UK resident, the gain is taxed on that settlor as their own income, whether or not they can benefit (s.465(3)), and the individual treatment applies to the settlor.

The gain, the slice and the 5% allowance do not use income tax rates, so they are not affected. A gain is savings income, which is taxed at the same rates across the UK, so the top-slicing relief used in the withdrawal comparator and shown in the segment planner is the same for a Scottish taxpayer. Choose Yes in the calculator to withhold the planners' tax due, net cash, effective rates, tax-free ceilings and tax-based rankings. These rows do not provide the evidence needed to confirm Scottish net tax; use a separate Scottish tax calculation for those figures.