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HMRC Exclusion 102 - chargeable event gain and beneficial ordering of the personal allowance

Article ID: 3037
Last updated: 07 Jun, 2023

HMRC Filing Exclusion 102 will affect taxpayers who have a Chargeable Event Gain (CEG) with notional tax, in the higher rate band and dividend income. The personal allowance is being allocated against the CEG when it would be more beneficial to allocate it against the nil rate dividend income.

Below is an example of how the calculation is currently working and a revised calculation showing how the personal allowance could be used more beneficially.

Current calculation
Non Savings Savings Dividends Total Tax
(Employment) (Life policy gain)
Income 9,750.00 40,250.00 2,000.00 52,000.00
PA -9,750.00 -2,100.00 -11,850.00
Taxable 0.00 38,150.00 2,000.00 40,150.00
Starting rate 0% 3,000.00 3,000.00 0.00
0% 500.00 2,000.00 2,500.00 0.00
7.5% 0.00 0.00
20% 29,000.00 29,000.00 5,800.00
40.00% 5,650.00 5,650.00 2,260.00
38,150.00 2,000.00 40,150.00 8,060.00
Less notional tax (38,150@20%) -7,630.00
Net tax payable 430.00
Beneficial ordering
Non Savings Savings Dividends Total Tax
Income 9,750.00 40,250.00 2,000.00 52,000.00
PA -9,750.00 -100.00 -2,000.00 -11,850.00
Taxable 0.00 40,150.00 0.00 40,150.00
Starting rate 0% ** 5,000.00 5,000.00 0.00
0% 500.00 500.00 0.00
7.5% 0.00 0.00
20% 29,000.00 29,000.00 5,800.00
40.00% 5,650.00 5,650.00 2,260.00
40,150.00 0.00 40,150.00 8,060.00
Less notional tax (40,150@20%) * -8,030.00
Net tax payable 30.00
* notional tax is based on taxable amount of gain
** full starting rate for savings available because taxable income reduced by 2,000 dividends
which are now covered by the personal allowance

If you have a scenario which applies to this exclusion, a paper return should be filed together with a Reasonable Excuse form which refers to the exclusion number.

To print your tax return with a Reasonable Excuse form:

  1. Go to Check and Finish and select Print. 
  2. Within Printing Preferences, select HMRC within Who is it for? This will ensure that the reasonable excuse form is ticked.
  3. At the bottom of the screen you will see a 'Click here' to enable the entries to be made on the Reasonable excuse form.
  4. Click Close once completed. 
  5. Create Preview to check pages. 
  6. Hover the mouse over the return to see the Print options.
Article ID: 3037
Last updated: 07 Jun, 2023
Revision: 4
Views: 510
This article was:  


Also listed in
folder Tax Return Production -> SA100 Individual Return

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