back to article abandons income splitting tax law

The government has dumped legislation intended to overhaul income splitting arrangements among individuals that would have effectively forced small, family-run businesses to pay more tax. In an embarrassing U-turn, Chancellor Alistair Darling said during his pre-budget speech on Monday that Her Majesty’s Revenue & Customs ( …


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  1. Anonymous Coward


    Yes, I pay less tax thanks to splitting my income with my wife. A *lot* less tax - people who aren't doing this would be shocked at how little tax I pay, and I even get free NHS prescriptions to boot.

    Technically we are both 50% shareholders and both deserve 50% of the dividends. We both take the same risks in the business, after all. The law was profoundly unfair (according to we who stood to lose because of it!) Glad that the Tories will be in before Darling can execute, which means it won't happen until the next Labour government, around 2020 or so.

    Posting anon in case this is prima facie evidence of intent for when they do finally bring the law in. Oh, and because this is going to seriously piss off anyone who's a basic employee. To those people I say this: quit, and become a contractor.

  2. Anonymous Coward


    It's not a loophole. Why shouldn't a spouse who owns half the company receive half the profits?

    We moved away from the feudal practice of taxing the wife as her husband's property long ago, this was always a retrograde step.

  3. Anonymous Coward
    Paris Hilton

    time to escape , whilst I can.

    just think once the government owns the banks, and all the data within them then we are all f***ed.

    they'll be able to setup the Direct Debit into your account without even asking.

    If you complain then you will be sent to some island of the North of Scotland, where they probably tested anthrax nearly 70 years ago.

    the future is bleak , the future is labour totalitarianism.

    To think I actually voted for these muppets. Can I ask for forgiveness from those that didn't?

    Paris , because even she wasn't as deluded as I (and lots of the rest of Britain) previously was.

  4. Rich Silver badge


    What I find odd with this is that on the one had, HMRC are saying "Small businesses are run by criminals and are avoiding tax and we hate you and are going to change the rules (again) to make you pay"

    ...and then on the other hand they seem to be saying "Times are hard and we know that if we bring this law in now then a lot of you are going to go bust (or at least find life very hard indeed)"

    Now, as a small businessman myself, while I very much welcome the U-turn, surely, if HMRC genuinely believe the existing system is "unfair" then it MUST be changed ....surely? I mean, nobody would suggest (say) delaying bringing in a law against house burglary because "times are hard and we know you need the cash (or telly/hifi/whatever)", would they?

    So, either HMRC are talking complete bollocks (again) and don't REALLY believe that all small businesses are thieves or ...errr ...I can't actually think of an alternative reason :-)

  5. Anonymous Coward

    @Karl H

    I forgive you..

    As long as you have learnt your lesson.. I wish people had learnt last time in 2005 but they didnt.....

  6. Red Bren

    Paradox II

    What I find odd is that on the one hand, the Government says the unemployed partner of someone in full time employment cannot claim benefits, but on the other hand, they cannot transfer their unused tax allowance to their employed partner.

  7. John Savard

    What they should do

    Exactly the opposite.

    Raise the tax rates, so that they still pull in the taxes they need... and let every couple split their income in half between them as a matter of course. This way, all married couples with a total income of X pounds per person would pay the same tax, which, by putting the tax burden more accurately on those who can afford to pay it would permit a higher tax rate, leading to more total taxes being collected.

    But I suppose people would scream that this encourages women to stay home and look after the children for the benefit of their husband's careers, so they could never do that!

  8. Anonymous Coward
    Anonymous Coward

    @Red Bren

    Come on, you know the government and HMRC like to have their cake and eat it!

    It's exactly the same as that contractor firm that was deemed by the HMRC to be an employee for tax purposes and stuck with a huge tax bill but was unable to claim employee benefits such as sick pay and holidays because the chap working there "was not an employee". Paradox much?

  9. Andy


    ...they've been prosecuting people who do this for a while, new law or no new law.

  10. Anonymous Coward


    Perhaps they were just being equitable; they don't go after their billionaire tax fiddling mates, so it's only fair to extent this to the little bloke.

    Mines the one with the "florida swamp for sale" leaflet in the pocket

  11. Anonymous Coward

    @ paradox much

    Thank you for highlighting the most annoying and offensive Americanism in existence. The use of "much?" following a noun.

    Instead of "paradox much?" might I suggest "A birrova paradox, innit?"

  12. Anonymous Coward


    "Oh, and because this is going to seriously piss off anyone who's a basic employee. To those people I say this: quit, and become a contractor"

    Child abuse really pisses me off - your remedy would be "become an abuser"?

  13. Tony Paulazzo

    This title is irrelevant

    >Darling also announced that the government will make available £1bn for small businesses in need of funds...<

    'Looks up, suddenly interested' Uh, I'm a small business, I want on this gravy train - where do I sign up?

  14. TeeCee Gold badge

    Strange use of "cost".

    It will not "cost" the Treasury anything over the next two years. That would imply that they're either losing out on something they get now or that they're going to have to spend more. In regard to the latter, since they don't have to implement or administer it, I'd have thought that rather the opposite applied.

    It can only be described as a cost if you also happen to believe that pre-natal chicken enumeration is a reliable indication of future flock sizes.

  15. Alistair

    Be a Darling and abolish NI, would you?

    I still say that's the answer to all this contractor stuff. Abolish the NI which is purely a tax on employment, and equalize the corporation and personal income tax rates.

    And since when is "working the system to your advantage" a crime?

  16. Ted Treen

    @Red Bren & AC (and Karl H)

    Not exactly a paradox:- just an example of the inequitable and iniquitous but deliberate machinations of our revered rulers.

    Would that it were possible to forcibly and effectively remind them that they have been elected as our employees to administer our country, and not as latter-day feudal lords.

    Short of explosions (controlled or otherwise), barricades in the streets and AKs all round, I cannot think of any pragmatic way of achieving this.

    Karl H, I also extend my forgiveness to you, but you must promise to never ever do it again. I suppose when you were bombarded with warblings of "Things can only get better" you didn't realise they meant for them, and not for us.

    As for things developing into a fairer and better system for us proles, I believe there's a greater likelihood of seeing Ian Paisley celebrating mass in St Peters Basilica.

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