Income Shifting Legislation - Special Reports

Income Shifting Legislation Contents:


On 9th October 2007 the Chancellor announced in his Pre Budget Report that measures would be introduced for 2008-2009 to tackle tax avoidance by 'income shifting.'

These measures are in the wake of the loss of the Arctic Systems (known as 'Section 660a') case by HMRC early this year. The Revenue tried to attack the tax savings available by married couples who split shares in their company, and subsequent dividends - thus taking full advantage of the tax allowances of both partners.

This section explains the background to the proposals, and will provide updates and guidance going forward.

^ TopAbout the proposals

Income shifting - guide for contractors
Explains where the Treasury's ''income shifting'' proposal comes from, how it is planned, and why it won't work.

Pre budget report: contractors dividend income under threat
In the wake of the loss of the Arctic Systems case, the Government is planning to change the ways in which contractors share dividend income. The Pre Budget Report warns of a consultation.

^ TopBackground - Arctic Systems

Contractors could pay 10% more in the treasury’s Arctic Systems attack
The latest Treasury attack on contractors comes in the wake of the Arctic Systems Case and attempts to increase our tax burden.

The house of lords has upheld the appeal by Arctic Systems
The House of Lords announced that the appeal by Arctic Systems has been upheld.

Contractors who work with spouses need to understand arctic systems
The Arctic Systems case, which the Revenue definitively lost on July 26, does have an effect on how contractors run their companies.

^ TopCalculating the cost

Income Shifting Calculator
Calculates effect on net income if you can no longer split dividends. Enter gross profits and salaries.

Section 660 Calculator
Our original calculator based on the settlement legislation. Same calculation, but enter contract rate, hours, etc.

^ TopAvoiding or coping with the Legislation

Income shifting proposals: how contractors should cope
The Treasury wants to put an end to income shifting, but contractors who share dividends with their spouses may be able to take concrete action to help ease the pain.

^ TopLatest news

Income shifting measures could be revived, says OTS Tax Director John Whiting

Measures to tackle income shifting – the ‘family business tax’ – are on the Office of Tax Simplification agenda reveals OTS Tax Director John Whiting.

Others | Tue, 21 Dec 2010

Income shifting attack on contracting sector unlikely under coalition

The coalition government is considering tax breaks for married couples, possibly signalling the end of the income shifting attack on contractors?

Others | Wed, 06 Oct 2010

Income shifting proposal unacceptable for contractors, experts say

Reaction to the announcement on ContractorCalculator that the income shifting proposal has been revived has been a unanimous: ''unacceptable.''

Others | Wed, 30 Apr 2008

Exclusive: return of income shifting to directly target contractors

The Treasury's income shifting proposal, which we all hoped would go away, is coming back, and it's expected to target contractors.

Others | Mon, 28 Apr 2008

Income shifting proposal revived by Treasury with contractors in mind

Proposals on income shifting would limit the ability for small businesses to share dividend income among spouses or partners.

Others | Mon, 28 Apr 2008

Gloomy budget offers little to contractors and business

The first Alistair Darling Budget offers little to contractors or to business in general, but the infamous income shifting proposal has been delayed for a year.

Others | Wed, 12 Mar 2008

Income shifting laws delayed until 2009

The infamous income shifting law has been delayed until 2009. This is in spite of protest from small business and objections from all major tax organisations.

Others | Wed, 12 Mar 2008

Income shifting - guide for contractors

Explains where the Treasury's ''income shifting'' proposal comes from, how it is planned, and why it won't work.

Others | Tue, 11 Mar 2008

Government's income shifting attack on contractors causes loss of confidence

The Government attacks on contractors, including the income shifting proposal, have caused a drastic loss of confidence in it.

Others | Tue, 11 Mar 2008

Libdem treasury spokesman is grim on family business tax

At a press conference of the Professional Contractors Group, Liberal Democrat Treasury Spokesman Jeremy Browne was grim about the prospect of blocking the proposed Family Business Tax.

Others | Tue, 26 Feb 2008

Contractors could see change on family business tax

Unofficial reports from Downing Street is that the Chancellor is planning to lighten up on the family business tax

Others | Mon, 18 Feb 2008

Family business tax imposes intolerable burden, says CIOT

The Government is committed to reducing the burden of administration on small business, but the Family Business Tax proposed by the Revenue imposes an intolerable burden of administration.

Others | Thu, 14 Feb 2008

Professional contractors group supports libdem motion on income shifting

PCG is strongly supporting the motion by Liberal Democrat Sir Robert Smith opposing the Treasury's income shifting legislation. We should all join in supporting it.

Others | Mon, 21 Jan 2008

Getting down to the details in income shifting for contracting

The Chartered Institute of Taxation has shed some light on how we should apply the new income shifting burden that the Treasury has placed on our shoulders.

Others | Fri, 04 Jan 2008

Income shifting proposals: how contractors should cope

The Treasury wants to put an end to income shifting, but contractors who share dividends with their spouses may be able to take concrete action to help ease the pain.

Others | Wed, 12 Dec 2007

How Much Will Income Shifting Tax Cost You?

Contractors who share dividends will pay a significantly higher amount of tax under the new income shifting proposals.

Others | Tue, 11 Dec 2007

Leading conservative John Redwood slams income shifting proposals

Conservative economic policy leader John Redwood slams the Treasury's Income Shifting proposal.

Others | Fri, 07 Dec 2007

Contractors must decide what their spouses are worth in income shifting proposal

The Government has published its consultation document on income shifting, and it's not pretty.

Others | Thu, 06 Dec 2007

Contractors face 47% tax rise with new income shifting proposal

The tax bill for contractors could rise as much as 47% when the new income shifting proposals from the Treasury are passed into law.

Others | Thu, 06 Dec 2007

Do contractors have to fire their wives or husbands?

With the proposals made by the Treasury in revenge for Arctic Systems, contractors could have to fire their wives or husbands as employing them might no longer make sense.

Others | Mon, 22 Oct 2007

Contractors face unworkable proposals on income splitting

A series of experts wonders if income splitting is possible in practice.

Others | Thu, 11 Oct 2007

Contractorcalculator exclusive: income shifting proposals: plan to revenge Arctic Systems

The Government's plan to attack 'income shifting' is probably not yet formalised. The attack will be swift, but not very sure.

Others | Wed, 10 Oct 2007

Pre budget report: contractors dividend income under threat

In the wake of the loss of the Arctic Systems case, the Government is planning to change the ways in which contractors share dividend income. The Pre Budget Report warns of a consultation.

Others | Tue, 09 Oct 2007

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