Ministers Abandon Income Shifting Legislation - For Now...

The government has announced it is not to proceed with the its controversial income shifting legislation but will continue to consult on the issue

In a statement included in the press notices accompanying the pre-budget report, the government said while it "firmly believes it is unfair to allow a minority of individuals to benefit financially from shifting part of their income to someone else who is subject to a lower rate of tax", rules dealing with the issue will be deferred as a result of the "current economic challenges". Instead, ministers said, the issue will be kept under review.

Andrew Hubbard, deputy president of the Chartered Institute of Taxation, said: "The current system for taxing small businesses is riddled with anomalies and inconsistencies and is need of a radical overhaul.

"But the income shifting regime would have made matters worse. It would have created a huge administration burden on all small businesses, would probably not have brought in significant additional taxation revenues and would have been a massive distraction at a time when businesses need to devote all of their energies to managing through the economic crisis."




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