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Is this really tax avoidance?

Husband who is a 50% tax payer owns an investment bond which he switches to his non taxpaying wife who then surrenders the bond at a gain. Clearly this transaction is done to benefit from the wife’s lower tax rates. But would HMRC really deem the husband still the beneficial owner and tax him instead?

In all my years I haven’t seen HMRC do this and this has been deemed sensible family tax planning. However, a number of third parties are now strongly suggesting this is wrong.

Many thanks  


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evasion or avoidance?

Yes it is clearly avoidance.

But was that your actual question?

Are you actually wanting to discuss evasion?

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OK probably not the worded brilliantly,I am just wanting to know if the above planning is no longer valid in the view of HMRC.

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Sorry for getting on my high horse but its a very important distinction and you cant really begin to discuss tax unless you make it.

Under which item of legislation do you think this transaction might be counted as evasion?

HMRC 'view' is irrelevant.

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How did he "switch" the bond? It must have been issued in his name and redeemed in his name.

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Assigned it to his wife - so bought in his name and sold in the wife's name

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Looks OK

Can't find anything which brings it into charge.

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