Most basic tax planning involving members of the same family is an attempt to utilise personal reliefs and starting, lower and basic rate tax bands of the persons involved. Income is therefore diverted from the higher rate taxpayer.
However, anti-avoidance legislation needs to be considered to ensure that the transfer of income is effective. Outright gifts of shares between husbands and wives were not thought to be affected by this legislation but the Inland Revenue is currently conducting an aggressive campaign aimed particularly at where income, mainly dividends, has been diverted from higher rate taxpayers to lower rate or non-taxpayers.
Consequently, extreme care should be exercised when looking to divert income to other members of the family.