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Income shifting occurs when individuals enter into arrangements to divert
income from higher rate tax payers to people connected with them who pay tax
at lower rates. This might occur if a husband and wife form a partnership
where one spouse does the majority of the work but profits are split
equally.
HMRC have consulted on legislation that was to be introduced from 6 April
2008 to tax the higher rate taxpayer on the income diverted to the lower
rate taxpayer. Following the consultation the Government has decided further
consultation is necessary and has deferred any change until 2009-10.
Our view
We welcome this as it should help ensure that the final legislation is
more clearly targeted. |
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