A couple of years ago the government announced it was going to tackle the issue of the splitting of income between spouses. Basically, the concept was that where businesses were being run predominently by one spouse, the government perceived it as being unfair that the income could be split between both spouses usually resulting in neither spouse becoming a higher rate taxpayer - this has long been standard tax advice by advisers.
The result of the proposed legislation would almost certainly be that all the income will be assessed on the spouse who works in the business or in proportion to the amount of time each spends in the business.
Most advisers believe some form of legislation in inevitable.
The legislation was expected in the 2008 budget but was delayed due to the complexity of designing such legislation.
It has now been announed that due to the credit crunch the proposed legislation has once again been deferred from the 2009 budget - note deferred not abandoned.
The concept of the legislation is as a result of the Arctic Systems case. Click on the link for an easy to read precis.
Dated : 09/02/2009
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