Gift tax

[Lonnie]

I run a Pemium Bond Syndicate at work. fifty members, they all subscribe a certain amount each month, and all have contracts, if we came up on one of the �1,000.000 prizes, �20,000 each, would I be liable to pay gift tax?, I've been told by a friend I would, but I understood that with contracts, that would be avoided, Could anyone enlighten please?.

[Loosehead]

Firstly there is no such thing as "Gift tax", a gift is tax free, however the revenue are generally a bunch of doubting Thomases and have a lot of difficulty believing that there are real gifts and have hence set an arbritary amount of �3000 where they would accept that it is a "gift" more than that will be investigated and may well be considered as taxable unearned income. However if you have a contract that clearly states who contributes what, when, how often and how any proceeds are split you can argue that you are playing the game as a joint pre arranged venture then you will not be persued by the inland revenue.

[BigMac]

Have a look at the National Lottery site, www.national-lottery.co.uk where there is a "Syndicate Manager Tool".

I can't imagine that Premium Bond syndicates would differ significantly from a Lottery one, or even a football pools syndicate.

[Lonnie]

Thanks guys, you've put my mind at rest.