Top slicing relief calculator

A chargeable event gain is the profit on an investment bond when a chargeable event happens. The events are a full surrender, maturity, the death of the life assured, an assignment for money or a large withdrawal. HMRC taxes it as savings income in the tax year of the event, stacked on top of your other income (ITTOIA 2005). Because a gain built up over many years lands in one year, it can push you into the 40% higher rate band. Top slicing relief compares that result with the tax on an average year's share, the gain divided by the complete years, multiplied back up. The difference is the relief. For a UK policy, tax at the basic rate is treated as already paid. With £45,000 of employment income and a £50,000.00 gain over 5 years, the tax before relief is £18,846.00 and the bill is £4,230.00. The same figures appear in HMRC's own example, listed under checked cases.

The insurer does not deduct this tax. It sends a chargeable event certificate with the gain, the complete years and whether basic rate tax is treated as paid, and you report the gain through Self Assessment. HMRC then works out the relieved liability itself.

On a full surrender or at maturity, the gain is the value you receive plus everything taken out earlier. The premiums paid and any previous gains already taxed come off (HMRC, HS320). A bond bought for £10,000 that pays out £16,000 has a £6,000 gain. Suppose £4,000 was withdrawn over the years and £1,000 of it was taxed as an excess. The withdrawals are added back and the £1,000 is taken off, so nothing is taxed twice.

• Value received: what the insurer pays now, after its charges.
• Earlier withdrawals: every part surrender, including those covered by the allowance.
• Premiums paid: the money you invested, top-ups included.
• Previous gains: excess gains already reported on earlier certificates.

Each premium earns a 5% tax-deferred allowance of 5% of itself for every insurance year, for up to 20 years. Unused allowance rolls forward. A part surrender only creates a gain when the total withdrawn goes over the allowance built up so far. That excess event is counted at the end of the insurance year, not on the day of the withdrawal (ITTOIA 2005 s507).

HMRC's helpsheet shows £3,700 taken from a £10,000 bond in its sixth year: the allowance is £3,000.00 and the gain £700.00. Choose "Part surrender" in the calculator for this case. It assumes one premium paid at the start and no earlier excess event. Taking £30,000 in year 5 from £100,000 leaves a gain of £5,000.00 and, for someone on £45,000, nothing to pay beyond the basic rate already treated as paid.

HMRC works the relief out in five steps, shown here with the example gain from the top of the page.

1. Charge the whole gain as the top slice of your income. The calculator gets £18,846.00 in the example.
2. Take off basic rate tax on the gain. For a UK bond that part counts as already settled, which leaves £8,846.00.
3. Divide the gain by the complete years to get the slice, which HMRC calls the annual equivalent: £10,000.00.
4. Charge the slice alone, less basic rate tax on it, and multiply by the years. This is the relieved liability.
5. The relief is the difference: £4,616.00, leaving £4,230.00 to pay.

In the slice step the Personal Allowance, the starting rate for savings and the Personal Savings Allowance are worked out again as if the gain were only the slice. The starting rate covers up to £5,000 of savings for people with little other income. That savings allowance is £1,000 for basic rate taxpayers and £500 at the higher rate, and nil above £125,140. The savings interest calculator explains both allowances for bank interest.

A UK insurer pays tax on the fund as it grows, so an onshore bond comes with basic rate tax treated as paid. It covers the first 20% of the bill and is not repayable, even for someone with no other income. An offshore bond grows largely without tax in the fund, so the whole tax on the gain is due. The relief itself is worked out the same way, with the basic rate taken off both liabilities.

The whole gain counts towards adjusted net income, the figure that removes the £12,570 Personal Allowance at £1 for every £2 above £100,000. With £90,000 of other income, the £50,000.00 gain wipes the allowance out, and part of it falls in the 45% additional rate band. The tax before relief rises to £25,771.00.

For gains from 2018-19 onwards, the slice step gives the allowance back when the slice alone stays under the taper. Over 5 years the relief is £6,771.00 and the bill £9,000.00. A policy held one complete year has no relief at all, and the bill is £15,771.00.

The Finance Act 2026 raises the savings rates to 22%, 42% and 47% for 2027-28, from 20%, 40% and 45% in 2026-27. It also turns the tax treated as paid on UK policies, and the rate taken off in the relief, into the savings basic rate. A UK bond therefore carries a 22% credit from 2027-28. For the example the bill moves from £4,230.00 to £4,180.00, since the higher credit and the higher rates largely offset each other.

Several situations change the gain, the years or the rates in ways the page does not model, so its result does not cover them.

• Time apportionment reduction for years you lived abroad, which cuts both the gain and the years.
• Deficiency relief when a final loss follows earlier taxed gains.
• A personal portfolio bond, where the years always count as one.
• Part surrenders after an earlier excess event, and bonds with several premiums at different dates.
• Scottish income tax bands for other income. Savings income itself is taxed at UK rates in Scotland.
• Bonds held by trustees or companies, and gains on death that fall into an estate.

For salary and PAYE on other income, the salary calculator shows the take-home side. The figures here were checked on 26 September 2026.