Contents
A word to the wise
Employee pensions
A matter of trust
Pension policies
Family tax planning
Mr and Mrs
Inheritance tax
Employee cars and fuel
Borrowings and tax
Tax-free perks
Two jobs = too much NIC?
Give generously and save tax
Children's savings?
Company or trade?
Capital gains
Business tax
Investment limits
Should VAT be flat?
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Husbands and wives are separately taxed, which means that they can split certain types of income between them to take better advantage of their personal allowances and tax rates. However, the Revenue can deny the benefit of this if they can show that there is an "arrangement" which involves "bounty" from one to the other, and it involves the transfer of something which is "wholly or mainly a right to income". In 2003, a Revenue announcement made it clear that they believe these rules apply to a great many businesses which are jointly owned by married couples, whether as companies or as partnerships. Most tax professionals had believed that ordinary shares in a company, or the interest of a partner in a business, are more than "wholly or mainly a right to income", so the rules cannot apply. The Revenue have taken a case on this point through the courts. They won in the lower levels, but the Court of Appeal found for the taxpayers in December 2005. The Revenue are pressing on with an appeal to the House of Lords, trying to establish that they can apply this principle more widely. The appeal won't be heard until after the self-assessment filing deadline for 2005/06, so we are entitled to assume that the Court of Appeal got it right. Even so, it is important to understand what the Lords' judgment will mean for you, whether the Revenue win or lose. If they win, all husband-and-wife businesses will have to look closely at how they are set up. If they lose, it may highlight some planning opportunities. It's one to keep an eye on.
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