Top-slicing relief calculator

Top-slicing relief stops a chargeable-event 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, scaled back up by N (the relieved liability); and the relief — the excess of the attributable tax over the relieved liability, floored at zero.

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.

An onshore bond carries a deemed 20% basic-rate credit — the life fund has already paid tax — so the member only ever pays the excess over basic rate. An offshore bond carries no credit and the whole liability lands with the member. The relief computation is the same; the net additional tax differs.