Originally posted by malvolio
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It's rather simpler than that. There is a very specific piece of S660 which states that income arising from parental gifts (e.g. shares held in trust) in excess of £100 per parent (i.e the income > £100) is specifically chargeable to tax on the donor. It's not the connected persons rule.
However, lets assume Grandad gives them 100k and they buy shares. That's fine. No connected rule applies.
But instead of buying shares in xyz plc with the 100k they then buy shares in the parents company. Then connected persons rule.
However, if assets are placed into an accumulation and maintenance trust, and it is properly trusteed etc then the parent will escape the taxation. However the cost of doing this is likely to exceed any possible benefit, and further the trust itself is liable to tax. There may be some scenarios where a saving could be made, but in order to ascertain this it is likely to cost more than any saving unless truly large sums are involved.
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