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Splitting
up
The Revenue have been very concerned in the last year about couples splitting up - not separating from each other, but dividing their taxable income. In particular, where one of the couple runs a business and gives shares in it to the other, the Revenue have said that they are likely to tax "the worker" on the income, even though it is now being paid to "the other half".
The ability to divide income between husband and wife for tax purposes dates back to the introduction of independent taxation in 1990, and these days it can save over £8,000 a year (where "the other half" would otherwise have no income at all, and "the worker" is a higher rate taxpayer). The Revenue clearly believe that some of the arrangements that people have put in place are artificial, and fall foul of a law which taxes the income on the original owner of something which is given away.
The tax profession has responded to this Revenue argument with strong disagreement - in most cases, according to the accountants and lawyers, the arrangement quite properly saves the tax. As long as there is an outright gift to "the other half", the Revenue cannot tax the original owner. At the moment, we are waiting for a court case to give some indication of who is right.
In the meantime, the Revenue have said that everyone who has set up such an arrangement should declare the income as their own on their tax return. Of course, they would say that - most accountants disagree. But it may be prudent to explain in the white spaces on the return that such an arrangement exists, so the Revenue can't argue afterwards that anything was being concealed.
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