From Lawpack's 101 Ways to Pay Less Tax.
Tax-free investments
In 2007/08 the capital gains tax annual exemption is £9,200. If you can structure your financial affairs to give you gains each year that don't exceed this figure, you effectively have extra tax-free income. Investments giving rise to gains are most frequently unit trusts and shares, although those held in ISAs and investments in government gilts don't have any capital gains liability.
While most people accept that investments of this type can go down as well as up, if you make investments through an authorised adviser and you suffer a loss because of poor advice, poor investment management or the adviser going out of business, there is a Financial Services Compensation Scheme, which can pay compensation of up to £48,000 - for more information, visit its website at www.fscs.org.uk.
Transfers between spouses
Assets transferred between spouses are exempt and each spouse is entitled to the same exempt amount of £9,200 (2007/08 figure).
If there will be tax to pay, consider transferring the asset to the non-taxpaying (or lower-rate taxpaying) spouse. But a word of caution: if this is a business asset, you should seek professional advice first as you may lose out on the valuable business taper relief.
Transfers between spouses followed by a sale could be attacked by HM Revenue & Customs as an anti-avoidance measure, so there should be a delay between the transfer and the subsequent sale. There should be no strings attached to the gift whatsoever, particularly something which might result in the eventual proceeds going back to the transferor.
Law stated as at 1 May, 2007
