Husband is a higher rate taxpayer. Wife is a basic rate taxpayer.
Husband currently owns a 22 year old investment in a life insurance bond, pregnant with a gain the realisation of which would be chargeable to Income Tax.
As he is already a higher rate taxpayer, top slicing relief would provide no benefit to him.
He proposes to assign the investment to his wife for no consideration. At some future date the wife will surrender the policy and claim top slicing relief by reference to her tax rate bands.
1) *IF* not caught by anti-avoidance legislation, does the proposal "work"? Ie confirm that the assignment to spouse is not itself a chargeable event, and spouse then takes on the entire history including 22 year top slicing.
2) Would the spouse exemption contained in IT(ToI)A 2005 s.626(1)-(3) apply? In particular, is the investment "wholly or substantially a right to income"? Sure, the surrender is TAXED as income, purely by reason of specific statutory intervention, but in all legal respects the gain is "capital".
3) If not caught by S.624 IT(ToI)A, would it be caught by FA 2013, part 5 / Sch 43 (general anti-abuse rule)?
With kind regards