Complete years (N) in top-slicing: full surrender vs excess event

N is the number of complete years that divides the gain into the slice. One year either way moves the relief. The rule for fixing N turns on the event: a full surrender counts from when the policy began. A part-surrender excess event counts from the last chargeable event.

The two cases

On a finalchargeable event — a full surrender, maturity or death — N is the number of complete years the policy has run since it started (reduced if the policy was ever assigned for money's worth). The £60,000 gain before any TAR in the offshore case the engine tests against ran six complete years, so N = 6 and the slice is £10,000.

Worked-example basis: No time-apportioned reduction is due for any gain or policy shown. TAR is not calculated or applied. Raw gains are shown before any TAR.

On a part-surrender or part-assignment excess event — a withdrawal above the cumulative 5% allowance — N runs from the start of the policy or from the previous excess event, whichever is later. Each excess event restarts the clock. A bond that has thrown off earlier excess gains carries a shorterN, and a larger slice, than its age alone suggests. Use the policy's full age on a part-surrender event and you over-state N, under-state the slice, and mis-state the relief.

The same-tax-year flag — and why it does not change N

N is always the number of complete 12-month periods from when the policy started to the event date — plain date arithmetic (IPTM7560, verbatim: "the number of complete years (periods of 12 months, not insurance years)"). Where a final chargeable event — a full surrender, death or maturity — falls in the same tax year as the most recent policy anniversary, ITTOIA 2005 s.499(5) merges the final insurance year with the previous one. That is real, but it feeds a different calculation entirely — the part-surrender 5% allowance schedule — not the N used for top-slicing relief. The calculator still surfaces this as a flag so you can verify the dates against the provider certificate, but it no longer moves N.

Because N depends on the event type, the dates and the policy's history of earlier gains, it's the figure most worth confirming on the top-slicing relief calculator, which shows N and the slice explicitly; the gain and the 5% allowance position come from the chargeable event gain calculator. For the full five-step computation that uses N, see how to calculate top-slicing relief, and for the 5% allowance itself, part surrender vs segment surrender.

IPTM7560 (number of complete years) · ITTOIA 2005 s.499(5) (same-tax-year insurance-year merge — 5% allowance schedule only) · figures IPTM-EX-03-OFFSHORE