IPTM3736 - Interaction between restricted relief qualifying policies and top slicing relief
Restricted Relief Qualifying Policies (RRQPs)
If an individual has made a chargeable event gain, they will receive a chargeable event certificate from the insurer. However, some individuals will be entitled to relief on this gain, for example a time apportioned reduction, top slicing relief or because the policy is a RRQP. For more information on RRQPs, see IPTM2076.
Any time apportioned reduction due is applied to the gain calculated by the RRQP rules.
Top Slicing Relief
ITTOIA2005/S536
For further information on top slicing relief, see IPTM3820 onwards.
Top slicing relief, on gains made before 6 April 2013, is given by reference to a number 鈥楴鈥�. N is the number of complete years from the issue of the policy less the number of complete years in which the policyholder was not resident in the UK. N is then used to calculate the top slicing relief. See .
From 6 April 2013, top slicing relief is given by dividing the number of foreign days in the material interest period by 365. If this number is not a whole number, it is rounded down. This is then deducted from the number of full years on which top slicing relief is calculated.
Order of Relief
The gain is reduced in the following order:
- RRQP
- Time apportioned reduction
- Top slicing relief.
Example
Clive makes a chargeable event gain of 拢50,000 on a policy that is a RRQP.
The reduction in the gain due because the policy is a RRQP is 拢5,000.
The time apportioned reduction is 拢10,000.
The top slicing relief due is 拢6,000.
The gain liable to tax is therefore:
Total gain 拢50,000
RRQP (拢5,000)
RRQP relieved gain 拢45,000
Remaining gain 拢45,000
TAR (10,000)
TAR relieved gain 拢35,000
Remaining gain 拢35,000
Top slicing relief (拢6,000)
Gain liable to tax 拢29,000