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Income splitting
Dec 11, 2007, 03:57 AM
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Mike
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Dec 11, 2007, 03:57 AM
Very early reaction but...
One of the main questions is whether Individual 1 can alter the income arising to Individual 2 at a later date.
So I start by fixing my salary for the next five years, say, from my personal service company at personal allowance level. I then issue fixed div, cumulative prefs to my wife, ranking pari passu with ordinary shares for voting and on winding up (so as not to fall foul of the settlement provisions).
The div is set at a level which will use her basic rate band, plus a bit for inflation over the next couple of years. HMRC still seem to think that, because I can withdraw the labour I provide to the company, I am still caught, but reading the provisions rather than the guidance I think they would have a lot of trouble getting it past the courts...
There are some minimum wage issues and other bits and pieces to consider, but I don't think it bodes well for the future of the legislation.
No liability... taken or refrained ... blah de blah...
To return to Taxation.co.uk, click here.
One of the main questions is whether Individual 1 can alter the income arising to Individual 2 at a later date.
So I start by fixing my salary for the next five years, say, from my personal service company at personal allowance level. I then issue fixed div, cumulative prefs to my wife, ranking pari passu with ordinary shares for voting and on winding up (so as not to fall foul of the settlement provisions).
The div is set at a level which will use her basic rate band, plus a bit for inflation over the next couple of years. HMRC still seem to think that, because I can withdraw the labour I provide to the company, I am still caught, but reading the provisions rather than the guidance I think they would have a lot of trouble getting it past the courts...
There are some minimum wage issues and other bits and pieces to consider, but I don't think it bodes well for the future of the legislation.
No liability... taken or refrained ... blah de blah...
To return to Taxation.co.uk, click here.
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