Budget 2008: Government delays income shifting rules
Article provided by businesszone.co.uk

The government has postponed the implementation of its controversial income shifting rules following a barrage of protest from small business groups.

Buried in the notes accompanying today's budget was a statement announcing ministers' attention to delay the rules until 2009.

Stressing its belief that it is "unfair" for some individuals to be able to shift part of their income to another person paying a lower rate of tax, the government acknowledged the opposition and said further consultation was required.

It said: "The government has considered the responses received to the recent consultation and believes that a further period of consultation will ensure that legislation in this area provides clarity and certainty for businesses and their advisers.

"The government now intends to introduce legislation through Finance Bill 2009 and will not enact legislation effective from 6 April 2008."

Andrew Hubbard, vice-president of the Charted Institute of Taxation, said the delay was welcome.

"The Institute's view has always been that the income shifting rules were a sticking plaster solution which did not address the real structural problems inherent in the ways that small businesses are currently taxed," he added.

"The Institute welcomes the government's commitment to a wider consultation over the way in which small businesses are taxed and looks forward to taking part in the consultation."

Andrew Jupp, head of tax at Tenon, also welcomed the delay in the rules but claimed uncertainty still remains. "I...deplore the continued uncertainty for small businesses and their owners," he said. "How can people make sensible decisions for the future?"

Article provided by businesszone.co.uk