Bonds loophole slammed shut
The government has introduced legislation to clamp down on a tax avoidance vehicle where tax payers would set government bonds against other earned income.
Paymaster General, Dawn Primarolo, said the avoidance scheme was ‘highly abusive’ and that schemes such as these ‘rob honest taxpayers and essential public services of revenue.’
The changes will prevent individuals and trusts from trading in Strips – securities that grant the right to receive an amount equal to the interest due on an individual bond, or the principal due on the redemption of a bond.
The rules came in to force yesterday.
For full details see the Inland Reveue release