Single premium investment bond - tax mitigation

GDB2222

I have a single premium investment bond that I bought around 25 years ago. It's worth around 4 times what I put into it, and I withdrew (tax free) around a third of the original premium.

If I cash it in now or when I die, there's income tax to pay on the taxable gain = the gain in value plus the one third I already took out.

There's top slicing relief, but I'm already into the 40% tax bracket, so I'll pay 20% tax on the taxable gain.

I understand that I can assign the bond to my wife, who is a basic rate tax payer. And, she can then cash in the bond without paying tax, as long as the top slicing calculation doesn't take her out of the basic rate band.

As an example, if the bond has £50k of gain, that would be divided by the 25 years it's been in force, to give a figure of £2k. That's then added to her other income, and as long as she's still within the basic rate band there's no tax to pay.

I just wanted to check that it really is as simple as that and there are no obvious gotchas?

webmasterpolo

Sounds right.