Asking for a friend .... actually, not, asking because I’d never thought folk w/could do this ...

cfw1994

Spreadsheetman wrote: »

This exactly. Once I actually retire I hope to relegate concern for my finances strictly to a background maintenance task, it's taken way too much of my attention for the last few years while I got everything in order.

As someone else who also clearly spends far too much time 'running numbers/scenarios', I do wonder whether I will be able to ever let go of that 'foreground' task! For now, I'm fine with it: it is almost a hobby....but maybe one year I will spend a week not checking on things!!

Paul_Herring

I do wonder whether I will be able to ever let go of that 'foreground' task!

Nah. The justification used then will be "making sure everything's still on track" during the decumulation phase...

Thriftydude

@bostonerimus I don’t recall proposing anything. A friend suggested some things and I said I’d post their query as I thought to myself, is that a thing, is it legal and how would I got about understanding that as I’d never even thought that way before, hence posting here where many like you have, in good faith, provided opinions .... no agitation therefore, I asked questions to hear answers and opinions. I’m not disappointed, and I’m very grateful, for those giving their time to answer as it’s made me think about my own circumstances in ways I hadn’t considered previously too ... just so we’re clear

I understand the motivation in this case to be as you say, tax avoidance and we agree that tax avoidance would attract HMRC attention but, if it’s not evasion, it most likely may not be illegal. The avoided tax is expected to run into many hundreds of thousands of pounds (if it were less beneficial, why someone would propose it is beyond me) and that the tax avoided would be passed to their offspring / heirs (so, if you like, it’s not ‘intended’ to make a well off couple any more well off).

We agree that avoiding extensive paperwork for such a contortion is clearly easier and that morally, it’s less complex a situation to deal with. The judgement on the sustainability of the effort, the morality of the impact it has on themselves, their offspring, grandchildren et al is for them to judge, though we all have our own views about its suitability for ourselves.

I (personally) hadn’t considered the charitable tax plan as a way to divert tax payments into more focussed philanthropy - if that’s what you meant ? If so, good idea, and I’d love to hear more of your experience and learning from going through this yourself. In terms of giving to family, my friend assumed that they’d have to drawdown taxed income (ignoring tax free lump sums etc) then give it away. Is that what you meant ?

In terms of who benefits from the tax, the principle of zen is good but some are closer to the degree of money that’s given to ‘capable’ non-working members of society and this causes human nature to kick in and force people to try to ‘direct taxation’ ... particularly when the bill runs into such large numbers. That may be the case here as one of the parties works closely with those receiving benefits and is staggered by everyday capable non-working folk in their 30s with state incomes (in their hands) of almost £30k pa.

Some other updates on this from my friend’s perspective ... they had always viewed sites like MSE as a cause to save £20 a year on gas or to find cheap jam. They’ve truly had their eyes open (much as I told them to start with) at the willingness of folk to offer views, the sensible way in which folk contribute (I think they were expecting a Twitter-like flaming for making such a heinous suggestion), but most of all this is focusing them in some detail around the professional advice they now recognise they need (they’ve been ducking the issue in case their professional service provider ‘dobbed them in’).

Thank you all again, from my friend, their spouse and also from me as I’m learning a lot too.

@spreadsheetman - great name and #kindredspirits

TD