To calculate the chargeable event gain, subtract the total premium withdrawn (TPW) from the accumulated investment (AI), multiply the result by the ratio of the withdrawal amount (WA) to accumulated investment (AI), and subtract this from the withdrawal amount (WA).
A Chargeable Event Gain Calculator is used to calculate the taxable gain arising from certain financial products, such as life insurance policies or investment bonds, in the UK. This calculation helps you understand the amount that may be subject to income tax when a chargeable event occurs, such as a surrender or maturity of the policy.
Formula:
CEG = WA – (AI – TPW) × (WA ÷ AI)
| Symbol | Meaning |
|---|---|
| CEG | Chargeable Event Gain |
| WA | Withdrawal Amount |
| AI | Accumulated Investment |
| TPW | Total Premium Withdrawn |
Solved Calculation:
Example 1:
| Calculation | Instructions |
|---|---|
| Given: WA = £10,000, AI = £50,000, TPW = £20,000 | Start with the given withdrawal amount, accumulated investment, and total premium withdrawn. |
| CEG = 10,000 – (50,000 – 20,000) × (10,000 ÷ 50,000) | Subtract the total premium withdrawn from the accumulated investment and multiply by the ratio of withdrawal amount to accumulated investment. |
| CEG = 10,000 – 30,000 × 0.2 | Simplify the equation. |
| CEG = 10,000 – 6,000 | Perform the subtraction. |
| CEG = £4,000 | The chargeable event gain is £4,000. |
Answer: The calculated chargeable event gain is £4,000.
Example 2:
| Calculation | Instructions |
|---|---|
| Given: WA = £15,000, AI = £60,000, TPW = £25,000 | Start with the given withdrawal amount, accumulated investment, and total premium withdrawn. |
| CEG = 15,000 – (60,000 – 25,000) × (15,000 ÷ 60,000) | Subtract the total premium withdrawn from the accumulated investment and multiply by the ratio of withdrawal amount to accumulated investment. |
| CEG = 15,000 – 35,000 × 0.25 | Simplify the equation. |
| CEG = 15,000 – 8,750 | Perform the subtraction. |
| CEG = £6,250 | The chargeable event gain is £6,250. |
Answer: The calculated chargeable event gain is £6,250.
What is Chargeable Event Gain Calculator ?
A Chargeable Event Gain Calculator is an important tool for anyone dealing with investments or savings, especially in the UK. This calculator helps you determine the gain you might incur when certain events occur, like cashing in a bond or selling an asset. To find out how to calculate it, you typically need to know the initial investment amount and the final value at the time of the event.
Understanding how chargeable gains are taxed is crucial, as these gains can affect your overall tax liability. Many people ask, how is a chargeable gain taxed? Generally, these gains are subject to capital gains tax (CGT), which varies depending on your income and specific circumstances.
Tools like the HMRC chargeable gain calculator or the Quilter chargeable event gain calculator make it easier to input your figures and get an accurate tax estimation. By using these calculators, you can plan better for your financial future and ensure compliance with tax regulations. This knowledge is especially useful for managing investments and maximizing returns.
