Glossary · UK
What is Chargeable Event Gain?
A taxable profit arising on certain life insurance policies and investment bonds, taxed as income rather than as a capital gain.
Full Definition
A chargeable event gain (CEG) is the profit treated as arising when a "chargeable event" occurs on a life assurance policy, capital redemption bond or investment bond — typically full surrender, death, maturity, assignment for value, or partial withdrawals exceeding the cumulative 5% tax-deferred allowance. Crucially, the gain is taxed as savings income under Income Tax, not under Capital Gains Tax, so the £3,000 CGT annual exempt amount does not apply. For UK (onshore) bonds the insurer has already paid tax broadly equal to basic rate, so a basic-rate taxpayer often has no further liability; higher and additional-rate taxpayers pay the 20% or 25% difference. Offshore bonds carry no such credit, so the full gain is taxable. Top-slicing relief can reduce the bill by spreading the gain over the number of complete policy years to test how much falls into higher rate bands. A CEG also counts towards adjusted net income, potentially reducing the £12,570 Personal Allowance or triggering the High Income Child Benefit Charge. Scotland and Wales: savings income is taxed using UK-wide rates and bands, so Scottish and Welsh taxpayers apply the same calculation; only earned and other income follow devolved bands.