Summer 2006 Newsletter


Brave New World

Business Not Pleasure

Summertime Blues

All That Glitters...

Casting The Net

Trust Gordon?

It Ain't Over...

One In The Eye

Keep Your Nose Clean

Foreign Affairs

When Is A Car...

Don't Walk Away

Avoiding, The Issue

Brown Is Anti-PC

VAT's Up Doc?

Fuel's Gold

An Age-old Question?

That's Unfair!

Year In Year Out

How Hard To Try?

It's A Rip-Off!

Outlaws Win

Show Some Restraint

Not Our Problem

They Cannot Be Serious?


Pension Disappointments

They Cannot Be Serious?

There is a standard plan for reducing capital gains tax where one half of a married couple has something to sell: often the other spouse won't have used the year's annual exemption, and might pay tax at lower rates, so it's an easy matter to put the asset into joint names before you sell it and then the gain is split half and half. The savings can be very large - over £10,000 for a gain of £41,800 transferred from a higher-rate taxpayer to a non-taxpayer in 2006/07.

This has been going on very successfully since the introduction of independent taxation of husband and wife in 1990. Now there are reports that the Revenue are questioning whether the plan works. Under the law, it's hard to see what they could do about it: a transfer from one to the other is required to be at a "no loss, no gain" price - you don't claim for this or qualify for it in any way other than simply being married.

It seems that the Revenue are arguing that the gift is really "half the proceeds" (i.e. after the sale) rather than "half the asset" (before the sale). If that's so, the gain is all realised by the original owner, and you don't save any tax. If you want the tax advantage, you clearly have to make sure that there is a properly effective legal transfer of ownership before the sale. But the Revenue are even arguing that a proper transfer can be ignored if it was undertaken only for the tax saving.

That's highly questionable, but it's worth being aware that the Revenue are raising the point. We will keep an eye open for any cases going to court. In the meantime, if you have capital gains to realise, we will be happy to discuss ways in which you can minimise the tax charge.