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Eventful charge

30 October 2012
Issue: 4377 / Categories: Forum & Feedback
The 2011/12 self-assessment tax return of a 76-year old woman declares a chargeable event for that year of £76,000. The gain accrued over a 21-year period, but the computer calculation of income tax liability yields an unexpected charge

I have a problem with a chargeable event in completing my client’s 2011/12 tax return and would appreciate comments from readers.

My client is aged 76 and her income for the year was from pensions (£23 970) and investment income (£12 663). She made gift aid payments of £1 123 (£1 405 gross).

In addition she has a chargeable event gain of £79 498 which has arisen over 21 years.

The gain has therefore arisen at the rate of £3 785 a year and if I include that as the gain over one year there is no higher-rate tax payable.

My computer software has however produced income tax payable of £17 852 after the total has been added to income as top-slicing relief of only £2.60 has been given. One effect of adding the total to income is the reduction of personal allowance to £112.


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