HMRC have been making recalcations for Top Slicing Relief. Some taxpayers now need to submit an amended 2018-19 tax return to benefit from these changes.

Following the First Tier Tribunal decision in Marina Silver v HMRC [2019] TC07013, changes were made to Top Slicing Relief (TSR) in Finance Act 2020.

  • The Personal Allowance is to be reinstated in the calculation of tax payable where it had been reduced before TSR owing to the inclusion of the total gain in the taxpayer’s income for the year.
  • Allowances and reliefs within the TSR calculation must as far as possible be set against other income in preference to the gain.

It had previously been confirmed that: 

  • The Finance Act 2020 basis of calculating TSR will be applied to 2019-20.
  • HMRC would revise TSR calculations for 2018-19 by concession (as the Silver decision came out in April 2019 suggesting that method of calculation was prevailing practice at that time).

On 28 August 2020, HMRC undertook the 2018-19 recalculation process and have issued revised calculations to taxpayers where additional relief was due. These revised calculations apply to tax returns received by HMRC on or after 28 November 2019, as HMRC’s power to amend returns only extends to nine months following receipt of the return.

Taxpayers with chargeable event gains who submitted their 2018-19 tax returns before 28 November 2019 must submit an amended return with a revised TSR calculation in order to benefit from the Finance Act 2020 basis of calculation.

  • The deadline for amending 2018-19 tax returns is usually 31 January 2021.

HMRC are holding a Talking Points webinar in respect of TSR on 22 October 2020 from 12:45 to 13:45. This aims to raise awareness of the changes to TSR and will include guidance on the years impacted and examples.

Taxpayers who are affected by the Finance Act 2020 change in TSR calculation for 2019-20 will need to file a paper tax return under online filing exclusion 116.


Investment bonds: A tax guide

Top Slicing Relief: How you slice it
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Self Assessment 2019-20 returns: Online filing exclusions
Many taxpayers are unable to file their Self Assessment returns for the year ending 5 April 2020 online due to software specification issues from HMRC.