Year End Tax Review 2008 Contents New Year's resolutions Investment limits Borrowings and tax Family tax planning Mr and Mrs Give generously and save tax Jam today, or jam tomorrow? Tax payback - tax credits Bringing it back home Children's pensions? A matter of trust Children's savings? All change for gains Second homes Portfolio gains Capital ideas Tax-free perks Employee pensions and NIC Pension policies Employee cars and fuel Business tax Pay rise for the other half? Company or trade Two jobs = too much NIC Should VAT be flat? VAT and cash Inheritance tax One careful owner

Mr and Mrs Because husbands and wives are separately taxed, they can split certain types of income between them to take better advantage of their personal allowances and tax rates. The Revenue may question this - for example, if one employs the other in a business and pays a salary, the salary can't be excessive for the duties involved. If one gives income-bearing investments to the other, it has to be an "outright gift" of something which is not "wholly or mainly a right to income" - a proper capital asset. In 2007, the Revenue finally lost a tax case about a married couple who jointly owned a company Arctic Systems Ltd, for which he did most of the fee-earning work. The House of Lords decided that the husband had made an outright gift of something more than a mere right to income: letting his wife own an ordinary share in the company, on which dividends were paid out of profits, was not caught by the Revenue's rules. This was a great relief for the couple involved and for many others who have similar arrangements, but the Government immediately announced that changes would be made to the law to overturn the decision. Until the March Budget, we do not know what shape these changes will take. At the moment it seems likely that any changes will be aimed at people splitting business income, but the Revenue have a history of designing sledgehammers instead of nutcrackers. If you share income with a spouse or civil partner, it will be important to keep an eye on these changes. Action Point! Do you jointly own a business with your spouse?