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Draft Finance Bill 2017 – disproportionate gains

HMRC want to allow policyholders who make large disproportionate chargeable gains, because they make excessive withdrawals from their investment bond, to apply to HMRC to have the situation rectified. HMRC has recently released draft legislation in this regard.
We welcome Clause 13 of the draft Finance Bill 2017 which has been drafted to be as flexible as possible; allowing policyholders the opportunity to contact HMRC outlining the precise factors of their case which lead to the disproportionate gain. If HMRC agree to the recalculation, this will probably be on an economic gain basis linked to the actual policy value. We also note that the clause does not place an onus on anyone to inform the provider where a gain is recalculated, so the policyholder will need to keep clear records and understand that the responsibility to ensure the correct income tax is paid rests with them.


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