In 2007 the Chancellor of the Exchequer announced his intention to prevent income shifting;  this, he claimed, is the practice of splitting income between two people, often spouses or civil partners, in order to make use of the tax allowance of the lower-earning partner.

This is a response to the loss by the HMRC of the case called Artic Systems.  Briefly this case revolved around the earnings from this business which, although earned by the husband, were split more or less 50:50 between husband and wife.  This reduced the total tax payable by the couple.

The current position is still that defined by the House of Lords.  In other words, couples are still entitled to organise their affairs so that their joint tax burden is kept to the minimum.

Should you require further advice or maybe wish to assess the possible savings or the impact of this legislation, please contact Alan Poole - alan@nabarropoole.com.