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UK top slicing relief calculator
UK tax on a gain from an onshore or offshore investment bond, with top slicing relief, for 2026/27.
About this calculator
What it estimates
When you cash in a life insurance bond, the gain is added to your income for one year. That can push it into higher rate tax and take away your personal allowance. Top slicing relief spreads the gain over the years you held the bond to work out a fairer charge.
How it works
We tax the whole gain on top of your other income. Then we tax one "slice" (the gain divided by the complete years held), multiply the result by the number of years, and give the difference as relief.
UK bonds come with basic rate tax treated as paid. Offshore bonds do not.
Assumptions (UK 2026/27 tax year rates)
- •2026/27 rates and bands for England, Wales and Northern Ireland
- •No dividends and one chargeable event
- •Savings starting rate, personal savings allowance and personal allowance taper are included
- •From 6 April 2027 savings income is taxed at 22%, 42% and 47%; the calculator will be updated for 2027/28
Estimates only, for orientation. Rates and thresholds change each tax year and your actual liability depends on facts this tool does not ask for. This is not tax advice.
For US–UK filers
Why your real number differs
The US does not recognise top slicing. For a US citizen, a UK or offshore bond is often a PFIC or a foreign life insurance contract with its own reporting, and the gain is taxed in the US under different rules. Check the US position before surrendering, not after.
Related
Sources
- Income Tax (Trading and Other Income) Act 2005, sections 535 to 537
- HMRC Insurance Policyholder Taxation Manual, IPTM3820 to IPTM3850
- HMRC helpsheet HS320, Gains on UK life insurance policies