← Calculators/Tax year 2026/27·Last reviewed 20 Jul 2026

Top-slicing relief calculator

The full five-step computation, with the Step-4 PSA recalculation shown — available only after confirming that no time-apportioned reduction is due.

Free, no sign-up. Runs the same engine and versioned tax-year config as the signed-in suite — the pension and bond calculation workbench UK paraplanners use to produce compliance-annex PDFs. Your calculator figures stay in this browser unless you choose to share or rerun them in the signed-in workbench. How we verify the numbers.

— In short

Top-slicing relief reduces the income tax on a chargeable-event gain from an investment bond by treating the gain as if it had arisen evenly over the years the bond was held.

The relief working compares the full gain with the tax on a single year's slice and scales that slice back over the complete years held. The member's real main liability is shown separately, then the relief is deducted from it, so the two statutory calculations are not silently mixed.

This tool does not calculate a time-apportioned reduction (TAR). It releases no final TSR figure until you confirm that no TAR is due after checking the relevant residence, beneficial ownership or assignments, security, and trust or estate history. TAR can apply to qualifying onshore and offshore policies, and UK residence alone does not settle whether it is due.

Start with the gain

Need the gain first? The chargeable event gain calculator works out the gain and the slice; this page relieves them.

— Inputs

Gain, years, income.

Enter the gain, complete policy years and other income. The working shows all five steps, including the Step-4 personal savings allowance recalculation.

Example figures. Select any field and the interactive calculator opens here, keeping them.

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

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More than one gain in the same tax year? The bond workbench computes the IPTM3840 sum-of-slices across all gains — this page handles one gain at a time. Neither surface calculates TAR.

— How it's calculated

Resolve time-apportioned reduction first

The gain entering the five-step computation may first be affected by TAR. Whether TAR is due can depend on relevant residence, beneficial ownership or assignments, rights held as security, and trust or estate history; UK residence throughout the policy term alone is not enough. This calculator does not calculate TAR and is limited to gains for which you can confirm, after those checks, that no TAR is due.

IPTM3731 · IPTM3732 · IPTM3733 · IPTM3735

The five steps

Top-slicing relief stops a bond gain that accrued over many years being taxed as though it all arose in one. The statute walks five steps: tax with the full gain in income; tax without it (the difference is the tax attributable to the gain); the annual equivalent — gain divided by complete years N; tax on that one slice at a notional income level (the member's other income plus the one-year slice, not the whole gain), scaled back up by N (the relieved liability); and the relief — the excess of the attributable tax over the relieved liability, floored at zero.

ITTOIA 2005 s.535–537 · IPTM3820

The post-2021/22 PSA recalculation

For gains arising on or after 6 April 2021, the Personal Savings Allowance and the starting rate band are recalculated from scratch inside Step 4, at the notional income level — not carried forward from Step 3. A higher-rate taxpayer at Step 3 (PSA £500) can be a basic-rate taxpayer at Step 4 (PSA £1,000), and the relief is larger as a result. This is the single most common implementation error in spreadsheet and DIY TSR calcs; the tool above prints both PSAs so you can see the recalculation working.

IPTM3820 · HMRC Agent Update 83 (April 2021) · FA 2020 s.37

Onshore vs offshore — where the credit does and does not reach

An onshore bond carries a deemed basic-rate credit — the life fund is treated as having already paid tax — so against the member's real liability they pay only the excess over basic rate. An offshore bond carries no credit against that real liability, so the whole charge lands with the member. For a credited onshore gain, ITTOIA 2005 s.465A and ITA 2007 s.1012 also put the gain above dividend income as the highest part of the real main calculation. That real-main figure is kept separate from the s.535 relief working shown by the tool.

Inside the relief computation the position is different, and this is where most spreadsheets go wrong. ITTOIA 2005 s.531(1) is an express carve-out: for the purpose of calculating relief under s.535, the s.530(1) deemed credit applies to offshore and foreign policy gains too. So Step 1 and Step 4 of the five steps carry the credit whichever bond type is in front of you — the tool prints the same relief figure for an identical onshore and offshore case, and only the net tax diverges.

The credit is also not a flat 20% of the gain. Under s.530(3)–(5) it is restricted to basic rate on the gain (or, at Step 4, the slice) less any personal allowance set against it, and it can never take the tax below nil or create a repayment.

ITTOIA 2005 s.530 (restricted per s.530(3)–(5)) · ITTOIA 2005 s.531(1) (relief carve-out) · IPTM3810

— How to calculate top-slicing relief on a bond gain

Step 1
Confirm that no TAR is due
Check the relevant residence, beneficial ownership or assignments, security, and trust or estate history. The calculator does not calculate TAR and produces no final TSR figure unless you can confirm that no TAR is due.
Step 2
Tax the full gain
Calculate the income tax on total income including the whole bond gain.
Step 3
Tax without the gain
Calculate the income tax on total income excluding the gain. The difference is the tax attributable to the gain.
Step 4
Find the annual equivalent
Divide the gain by the number of complete years the bond was held (N) to get the one-year slice.
Step 5
Tax the slice and scale up
Tax the slice at a notional income level — other income plus one slice — recalculating the personal savings allowance and starting-rate band at that level for gains on or after 6 April 2021, then multiply by N to get the relieved liability.
Step 6
Take the relief
Top-slicing relief is the tax attributable to the gain minus the relieved liability, floored at zero.

— Worked example

Offshore bond · certificate assumed to state tax not treated as paid · no TAR due confirmed · 2025/26 · £60,000 gain over 6 complete years · £35,000 other income

Annual equivalent (gain ÷ 6): £10,000
PSA at Step 3 — full gain in income (higher rate): £500
PSA at Step 4 — slice in income (basic rate): £1,000
Tax attributable to the gain: £8,846
Relieved liability (Step 4 × 6): £0
Top-slicing relief: £8,846

Figures computed live by the same engine the tool above runs, on the confirmed basis that no time-apportioned reduction (TAR) is due; the engine has not calculated or applied TAR. This case is the IPTM-EX-03-OFFSHORE regression anchor, pinned at zero-pence tolerance in CI. The PSA still recalculates from £500 to £1,000 at Step 4 (post-2021/22) rather than carrying the Step-3 figure forward — but on this case the deemed-tax credit (ITTOIA 2005 s.531(1), applied within the relief calculation for offshore bonds too) already floors the relieved liability at £0 under either PSA figure, so the recalc makes no difference to the final relief here. See /learn/top-slicing-2021-psa-recalc-iptm3820 for a case where it does.

— Frequently asked questions

How is top-slicing relief calculated?

After confirming that no time-apportioned reduction (TAR) is due, there are five steps. Tax the total income including the whole bond gain; tax it again excluding the gain — the difference is the tax attributable to the gain; divide the gain by the complete years held to get the annual equivalent, or "slice"; tax that one slice at a notional income level and multiply the result back up by the number of years (the relieved liability); the relief is the tax attributable to the gain minus the relieved liability, floored at zero.

Does time-apportioned reduction affect top-slicing relief?

It can. TAR can apply to qualifying onshore and offshore policies, and the gain entering the TSR computation may need to be reduced first. UK residence alone does not settle whether TAR is due: check relevant residence, beneficial ownership or assignments, security, and trust or estate history. This calculator does not calculate TAR and gives no final TSR figure unless you confirm that no TAR is due.

What changed for top-slicing relief in 2021?

For gains arising on or after 6 April 2021, the personal savings allowance and the starting rate band are recalculated from scratch inside Step 4 at the notional income level, rather than carried forward from the main calculation. A taxpayer who is higher-rate on the full gain can be basic-rate on the one-year slice, which gives a larger allowance and more relief. This is the IPTM3820 / HMRC Agent Update 83 (2021) clarification.

Is top-slicing relief different for onshore and offshore bonds?

The relief calculation uses the s.530 deemed-paid amount for both types because s.531(1) expressly preserves it for offshore gains “for the purposes of calculating relief under section 535”. The real main liability differs: an offshore bond has no real credit and retains ordinary s.16 ordering, while a credited onshore gain keeps the restricted credit and is the highest part under s.465A/s.1012. With dividend income the difference is therefore not always a simple flat-credit subtraction. The s.530(3)–(5) credit is restricted to basic rate on the gain (or slice) less personal allowance set against it and cannot create a repayment.

What is the annual equivalent, or "top slice"?

The annual equivalent — the top slice — is the gain divided by the number of complete years the bond was held. It is the single-year slice that Step 4 taxes at a notional income level before scaling the result back up by the number of years to give the relieved liability. A "top slice calculator" is this same five-step relief calculation under a shorter name.

Why do some top-slicing calculators give a different answer?

The most common error is carrying the main-calculation personal savings allowance into Step 4 instead of recalculating it at the lower notional income (the pre-2021 method). For post-2021 gains that can understate the relief: on a £90,000 offshore gain over 6 complete years against £45,000 of other income, the PSA recalculates from £0 to £500 at Step 4 and the pre-2021 method gives £600 less relief. It does not bite on every case — on the worked example on this page the deemed basic-rate credit already floors the relieved liability at £0 under either PSA figure, so both methods give the same relief. The second common error is omitting the ITTOIA 2005 s.531(1) deemed-tax credit from the relief calculation on an offshore bond, which overstates the relieved liability. This calculator prints both the Step 3 and Step 4 PSA so the recalculation is visible, and applies the s.531(1) credit to both bond types.

— Related

— When you're ready

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