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Transfering an asset betrween spouses
Geoff James2
Posted: 04 November 2012 09:35:28(UTC)

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Please can any help with this tax question?

Suppose I have a UK investment. It is a financial asset (it a type of bond paying interest). This investment is fully registered in my name for UK tax purposes. Suppose I decide to gift this whole investment to my spouse. My spouse is fully registered with the UK tax office and would take on the future income tax liability.

My problem is that the company that has my investment relatively new and does not have a facility to allow transfers (to a spouse or otherwise). All they suggest is that I wait for the account to mature and then transfer the cash to my spouse.

If I was to write a letter to my wife setting out a clear gift to her showing a transfer of ownership, then she will "own" the investment and be responsible for all future income tax. If the tax office then challenge me why I have not declared the income tax, then I can show them the letter and the tax office should be satisfied that my wife is paying it. My wife would therefore own the investment in all but registered name.

Does anyone know if this letter would satisfy the tax office? Logically it would, but ass with all matters related to tax, there has to be a catch?


D G Stonebanks
Posted: 05 November 2012 18:40:12(UTC)

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1: You could post the question of the ADFVN CGT thread - you'll get an answer there.

2: You could ask your tax office. I would write 'cos that way you'll get an answer in writing, although I suspect you'll have to wait a long time for it.
Posted: 05 November 2012 20:01:17(UTC)

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I don't know for certain but I like DGS answer no 2.

What you plan to do in the short term is effectively to assign the asset to your wife. Logically, you should be able to a) assign it and b) tell HMRC that you have done it, even send them a copy. However, that is only theoretical and I do not know if HMRC have any mechanism for dealing with such an arrangement.

In any case, there should be no problem generally with transferring between spouses, as you are probably aware.

I would start by asking them directly.

Posted: 06 November 2012 11:19:47(UTC)

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It strikes me that you are 'looking at this through the wrong end of the telescope'. Your problem is not with the taxman, but with the company which is unable/unwilling to transfer ownership of the asset. You're a bit vague about what this "financial asset" is (Is it a loan? Is it a corporate bond?) but it is clearly not tradeable on any exchange or you would simply have used a stock transfer form to gift it to your wife. Maybe you still can. Have you checked? If that is not possible, why can you not write to the Company Secretary explaining that you have transferred all the rights in this "asset" to your wife and asking that all interest and redemption monies from that date be sent to her and get the company to acknowledge that the debt is now to her? Without doing this, I don't see how you can expect the taxman to accept that income which was formerly yours is now your wife's, otherwise we could all arbitrarily allocate income between spouses in any tax year to suit our best advantage.
Geoff James2
Posted: 06 November 2012 18:39:55(UTC)

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Thank you all

I was trying not to provide too much detail on the asset. It is a number of loans to UK companies via one of the web based syndicated loans platforms. This one has been going for just over a year and does not have the functions to re-assign or sell the loans.

My logic is very much that assets can be easily transferred between spouses. But I then think about the automated tax returns that interest paying companies like this one provide to the HMRC along with my NI code. The tax man would see a mismatch in the tax declared & paid and start chasing for their pound of flesh.

I like the idea of a letter to the tax man. I will give it a try.

Thanks again.
Posted: 07 November 2012 10:15:03(UTC)

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"My logic is very much that assets can be easily transferred between spouses."

Yes they can, Geoff, so the key to your problem is to find a way of transferring it. I don't see how the taxman can solve your problem whilst the loan is in your name with interest payments being paid to you. I also don't see why the loan platform company/site wouldn't accept an instruction from you transferring the loan rights to your wife. After all, what would happen if you died and had left all your assets to her?

You are right that HMRC will pick up any anomalies between your declared income and returns submitted by the institutions paying you interest. A couple of years ago, my wife received notification that she was to be subject to a Revenue investigation and, on enquiry, it turned out to be in respect of interest paid on a Trust account where she was first-named Trustee. It was easily solved by showing that the interest had been declared and taxed appropriately within the Trust, but the point is that in this computerised world any mismatch will be flagged up immediately and when HMRC comes to call, you can't just say 'it's hers not mine' without supporting evidence.
White Stick follower
Posted: 07 November 2012 18:31:03(UTC)

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I see no reason why you cannot gift the investment(s) to your wife, using the usual phrase, ' as a gift of natural love & affection' .As already mentioned gifts between spouses do not attract an tax liability in terms of the actual transaction. There might be a liability incurred by your wife, in due course, dependent on her tax status. It seems to me that the obstacle is the Fund Holding Company.
As a matter of record I have transferred 4 With Profits Funds to my wife, a non- tax payer, in the above terms.None of the companies with whom I had originally invested had any difficulty with this.
Again, for the record I am not a qualified professional and cannot give advice on law or investments. The above is merely a personal view.
Posted: 11 November 2012 11:12:19(UTC)

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You can certainly assign the asset to your wife so that she becomes the beneficial owner

The trouble is that the company is bound to account to the tax authorities regarding interest in your name. So a letter to the tax man is the way to go

Alternatively, persuade the company to change its mind or examine the ability to withdraw even at a penalty
Bobby Reed
Posted: 26 November 2012 06:23:49(UTC)

Joined: 26/11/2012(UTC)
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I don't have that much idea about this company but I can say that theer must be many possible chances to transfer it, if company is willing to transfer :
Bobby Reed
Posted: 26 November 2012 06:26:34(UTC)

Joined: 26/11/2012(UTC)
Posts: 2

It will be better if you transfer it even after paying the penality.
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