Income shifting - defferal of new rules

As you will no doubt be aware, the government were rushing full steam ahead towards the new income shifting rules, with a start date of 6 April 2008. These rules were designed to negate the tax advantages obtained by many families who run their own businesses. The advantage is usually gained by splitting income between family members to use up personal allowances and the lower rates of tax and the proposed rules were aimed at company dividends and partnership profits.

However, there has been a change of heart. To quote from the Budget Day press notices:

'The government firmly believes it is unfair that some individuals can arrange their affairs to gain a tax advantage by shifting part of their income to another person who is subject to a lower rate of tax.

The government has considered the responses received to the recent consultation and believes that a further period of consultation will ensure that legislation in this area provides clarity and certainty for businesses and their advisers.

The government now intends to introduce legislation through Finance Bill 2009 and will not enact legislation effective from 6 April 2008.'

Obviously, we felt you would want to be aware of this deferral and we will keep you informed of developments.

We offer a comprehensive service to all types of businesses and individuals, and have the benefit of membership of the UK200 Group of Practising Accountants, enabling direct access to expertise in areas outside our normal work.

Regulated to carry on audit work for a range of investment business activities by the Institute of Chartered Accountants in England and Wales

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