Amit Roy

Foreign life insurance policy on death

Key point is that the death benefit is not taxable.

All gains are chargeable unless they are qualifying policies._43.6
Foreign i.e. policies issued by an non-EU insurer say from India will be a non-qualifying policy._43.21

Death is a chargeable event._43.6

Gain is reported in deceased’s tax return._IHTM28160

Computation of gain_43.7

Gain = TB – (TD+PG)

TB is total benefit; For a life insurance policy, where the chargeable event is the death of an individual covered under the policy, the value of the policy must be taken to be the surrender value of the policy immediately before the death and not the amount of the proceeds. This is the amount of surrender proceeds that the insurer would, as a matter of fact, have been prepared to pay to the policyholder if the policy had been surrendered immediately before the death._IPTM7520i.e. death benefit is not taxable.

TD premiums paid

PG previous gains; previous gains charged on partial payouts.

See also Friends Provident International note example – death on Page 3.

Charge to Tax_43.8

Gain is treated as savings income.

Summary of Basic rate tax credit:_{RA Blog}

Policy Type	Basic rate credit	Top slicing relief calculation
UK policy	Yes	Yes
Foreign policy	No	Yes

For calculation of Top slicing relief see Tolley Exam training guide.

Reduction for periods of non-UK residence_43.11

Apply if appropriate.

Sources:

Book – Tolley Annual Income Tax re numeric footnotes in this article.
HS321 Gains on foreign life insurance policies (2025) – GOV.UK
Taxation of Indian Life Insurance policy in UK – Roy Accountants

Employment Rights Act 2025

Key changes for SMEs with date of change.

From 6 April 2026

Statutory Sick Pay

Removal of the Lower Earnings Limit
All eligible employees will be entitled to SSP regardless of income. SSP will be paid at 80% of normal weekly earnings or the uprated weekly flat rate of £123.25, whichever is lower.

Removal of the Waiting Period
SSP will be paid from the first full day of sickness absence, not from day four.

From October 2026
Tipping

Employers will need to:

a. consult with workers or their representatives before creating a tipping policy.

b. update their tipping policy every 3 years – most restaurants made new tipping policy in circa Oct 2024 due to Employment (Allocation of Tips) Act 2023 which required them to pass 100% tips to employees, so due date for update of tipping policy will be in Oct 2027.
Employment tribunal time limits
Time limits for making a claim to an employment tribunal will increase from current 3 months to 6 months.

From 1 January 2027
Unfair dismissal – for an employee to bring an unfair dismissal claim against an employer, time period that employee needs to be in the job will be reduced from 2 years to 6 months.

Other 2027 changes
Zero-hours and low-hours contracts – Workers will get right to guaranteed hours.
Compensation for cancelled shifts, moved to another date, or cut short by an employer.
Reasonable notice of shifts – Employers must provide reasonable notice of shifts and changes to shifts.

Sources and further reading:

Employer bulletin Feb 2026 re Statutory Sick Pay
Employment Rights Act 2025 – Acas

VAT Repayment Return

How to be prepared

First VAT return is usually of repayment. I have listed below actions you can take to make the process easier .

File early to get monies early.
Do not wait for the deadline. HMRC processes repayment within 30 days of VAT submission date, not deadline date, so earlier you file earlier you will get repayment in your bank account.

2. Use HMRC online tool to check VAT repayment status: link

3. Email address of HMRC VAT repayment team given below, but do not chase them before 30 days.

vatfirstperiodrepaymentclaims@hmrc.gov.uk

4. Prepare to submit supporting paperwork online and then wait for the letter with Case reference.
You can use this service to check on documents required to ensure all are available while preparing VAT return. HMRC will send a letter in post requesting paperwork to support the repayment like invoices, bank statement etc. Previously we had to send everything by post but now it’s done online. You can start preparing immediately and once letter with Case reference is received, submit the form.

Send details to support your VAT repayment claim – GOV.UK

Agent can complete this form on behalf of the client.

Source:

VAT repayments: Overview – GOV.UK

Dividends from Authorised Investment funds (AIF)/OEIC

Dividends

In the hands of an investor (unit holder) within the charge to IT, dividend distributions are treated in the same manner as any other UK company dividend.¹

Equalisation is returned capital sum. As it is a capital receipt, it should be deducted from the unit holder’s cost of the units for CGT purposes.²

It should not be treated as a capital distribution. It is a return of the initial price paid and it should therefore be deducted from the price paid when computing the chargeable gain on the eventual disposal. ³

Calculation for tax return

Dividend

Tax payer usually receives a Tax Certificate from his Broker showing both dividends paid and equalisation figure. Dividend figure included equalisation, so we need to deduct equalisation figure to get to the Dividend figure that needs to be reported in the tax return.

Capital Gain

Equalisation should not be treated as a capital distribution. It is a return of the initial price paid and it should therefore be deducted from the price paid when computing the chargeable gain on the eventual disposal. ³

Tax Return

UK Company Dividends are put in Box 4 and AIF distributions Box 5 of SA100 TR3.

Notes: