Section 660A - Changes on the horizon?

[TheCyclingProgrammer]

My point really is that direction of travel is clear, the tax incentive of pretending you are a business by incorporation and then sitting next to the guy doing the same thing as an employee is coming to an end.

You might be right about that, fortunately we aren't all bums on seats...

[Fred Bloggs]

I agree with the tail end of your comment, but I don't agree with your earlier one (that divi taxes make it irrelevant).

Doesn't matter whether dividend allowance goes down and/or tax rates go up. As long as marginal rates of tax increase as income increases, there's going to be incentive to transfer income from higher earning individuals to lower ones. This applies whether the low rates are 0% and high rates 25% (as a couple of years ago), or 7.5% and 32.5% (as now), or if they increase further.

Or have we misunderstood your point?

Perhaps I'm not so eloquent. My point really is that direction of travel is clear, the tax incentive of pretending you are a business by incorporation and then sitting next to the guy doing the same thing as an employee is coming to an end. Fact. Whether by dividend taxation or other means, the situation is changing, fast.

[Maslins]

IMO, to be legislated away over the next parliament or two. The proposals now in the long grass will stay there. Make no mistake, the tax benefits enjoyed to date by contractors are rapidly coming to an end.

I agree with the tail end of your comment, but I don't agree with your earlier one (that divi taxes make it irrelevant).

Doesn't matter whether dividend allowance goes down and/or tax rates go up. As long as marginal rates of tax increase as income increases, there's going to be incentive to transfer income from higher earning individuals to lower ones. This applies whether the low rates are 0% and high rates 25% (as a couple of years ago), or 7.5% and 32.5% (as now), or if they increase further.

Or have we misunderstood your point?

[SeanT]

IMO, to be legislated away over the next parliament or two. The proposals now in the long grass will stay there. Make no mistake, the tax benefits enjoyed to date by contractors are rapidly coming to an end.

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[Fred Bloggs]

Not at all. £90k in profit shared 50/50 between two taxpayers with no other sources of income would save significant tax compared to one - about £12-13k I think.

IMO, to be legislated away over the next parliament or two. The proposals now in the long grass will stay there. Make no mistake, the tax benefits enjoyed to date by contractors are rapidly coming to an end.

[TheCyclingProgrammer]

It's pretty pointless changing anything WRT this IMO. When the divi tax kicks in at GBP 2k and the inevitable increase in tax rate from 7.5% happens. Income shifting legislation becomes pointless?

Not at all. £90k in profit shared 50/50 between two taxpayers with no other sources of income would save significant tax compared to one - about £12-13k I think.

[TheCyclingProgrammer]

Whatever it is it would have to be pretty heavy to overturn the Arctic judgement, which pretty much set in stone that between spouses it is entirely legal and permissible

Only within the scope of the existing (and previous) settlements legislation though, of course.

Like you say, they tried to legislate around this with the "Family Business Tax" but it didn't make it very far. I don't think we should rule out somebody trying to tackle this again in the future though it has to be said, it's been nearly a decade now with not much activity in this area - there are easier targets.

[Fred Bloggs]

It's pretty pointless changing anything WRT this IMO. When the divi tax kicks in at GBP 2k and the inevitable increase in tax rate from 7.5% happens. Income shifting legislation becomes pointless?

[Gomez]

Yep total agree after reading up a bit about this yesterday. 'Spousal exemption' conditions seem to be firmly in place and not going anywhere.

Whatever it is it would have to be pretty heavy to overturn the Arctic judgement, which pretty much set in stone that between spouses it is entirely legal and permissible. But I've not heard any rumours of change myself.

Of course the old Brown/Darling lash up of the Family Business Tax (mysteriously appearing days after the final Arctic decision was handed down...) is still out there in draft form. I suppose it could be resurrected, but it would face some extremely serious opposition if it were.

[malvolio]

Whatever it is it would have to be pretty heavy to overturn the Arctic judgement, which pretty much set in stone that between spouses it is entirely legal and permissible. But I've not heard any rumours of change myself.

Of course the old Brown/Darling lash up of the Family Business Tax (mysteriously appearing days after the final Arctic decision was handed down...) is still out there in draft form. I suppose it could be resurrected, but it would face some extremely serious opposition if it were.

[Gomez]

Thanks for the clarification. The blog seems to have disappeared this morning. Perhaps if was out of date information published by mistake. If I get any more news, I'll update.

Firstly, S660A became S624 years ago.

I haven't heard a single thing about changes to the settlements legislation or any other new legislation that might be aimed at tackling "income shifting".

If you have, perhaps you'd like to share it? What has your accountant blogged about?

[TheCyclingProgrammer]

Firstly, S660A became S624 years ago.

I haven't heard a single thing about changes to the settlements legislation or any other new legislation that might be aimed at tackling "income shifting".

If you have, perhaps you'd like to share it? What has your accountant blogged about?

[Gomez]

Is anyone aware of what is happening with respect to Income Shifting legislation? My accountant has blogged about this recently but its unclear to me what is changing and when any changes may come into force. I've had a look in the links on the right but there doesn't appear to be anything particularly new there. Can't find any recent threads on the topic either.