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 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.''
Last April
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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.
Last April
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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.
Last March
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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.
Last March
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Wed, 12 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.
Last March
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Tue, 11 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.
Last March
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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.
Last February
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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
Last February
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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.
Last February
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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.
Last January
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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.
Last January
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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.
Last December
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Wed, 12 Dec 2007
Leading Conservative John Redwood Slams Income Shifting Proposals
Conservative economic policy leader John Redwood slams the Treasury's Income Shifting proposal.
Last December
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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.
Last December
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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.
Last October
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Mon, 22 Oct 2007
Contractors Face Unworkable Proposals On Income Splitting
A series of experts wonders if income splitting is possible in practice.
Last October
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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.
Last October
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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.
Last October
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Tue, 09 Oct 2007
^ Top