Income Shifting, Shifted.
March 13, 2008 by mike · Leave a Comment
Well, we had the budget yesterday. Amongst the points raised was an inferred acknowledgement by Alistair Darling that the new tax wouldn’t work - yet. “Income Shifting” legalisation has been shifted back to April 2009. Does an unpopular tax put back sound familiar? Read more
Income Shifting: A response from Gerald Howarth MP
March 5, 2008 by mike · Leave a Comment
Early Day Motion (EDM) 714 is gathering support amongst members of parliament across the entire political spectrum and I am pleased to report that today my local MP has signed too. A total of 159 members of parliament have now signed this motion; Conservative: 85, Labour 19, Liberal Democrats: 49, Plaid Cymru: 1, SNP: 4 and SD&LP: 1.
As promised in my letter to Gerald Howarth MP, here is his response in full:
From: HOWARTH, Gerald [mailto:geraldhowarth@parliament.uk]
Sent: 27 February 2008 10:56
To: Mike Wilson
Cc: READY, Caroline
Subject: RE: Early Day Motion 714, “Income Shifting”Dear Mr Wilson
Thanks for your email on this important matter. I have not yet signed the EDM but plan to do so today as I have researched the issue after it was recently raised with me by another constituent.
We are determined to make it easier to do business in the UK and to ensure that local and central government recognises that small businesses are the engine room of our economy. Government should encourage more people to aspire to be their own bosses and should support them in that aspiration.
David Cameron has said many times that a Conservative Government would recognise marriage in the tax system as families matter more than anything else within our society. By way of contrast, Labour’s income shifting proposals will place a penalty on the recognition of marriage in the tax system. On that basis alone, I am happy to sign EDM 714.
The proposals are entirely consistent with Gordon Brown’s hostility to small businesses, coming as it does on top of the 80% increase in capital gains tax which a number of businessmen have told me has been the last straw for them. His stewardship of the economy, for so long commended by commentators, has now been exposed for what it is – a reckless disregard for prudence. We have consistently warned that since he departed from the original Tory spending plans he was putting economic prosperity at risk, but that did not suit the commentators’ books at the time.
Thanks for making your views known to me and I urge your fellow businessmen to protest to their own MP. Those who are my constituents can also write to me as the more letters / emails I receive on the subject the better placed I am to protest to the Government.
Best wishes
Gerald Howarth MP
Member of Parliament for Aldershot & Shadow Defence Minister
House of Commons, London SW1A 0AA
Tel: 020 7219 5650 Fax: 020 7219 1198
Income Shifting: My Letter to Gerald Howarth, MP for Aldershot
February 23, 2008 by mike · 2 Comments
Earlier this month I blogged about “Small family-owned businesses to be penalised this April“. After reading Jaffa Brown’s recent blog post on the same subject I decided to check in with parliament.gov.uk and see if my local MP, Gerald Howarth, had signed up to support Early Day Motion 714 against the proposals…
The Early Day Motion 714 states:
INCOME SHIFTING
16.01.2008
Smith, Robert
That this House notes with concern the proposals for a new tax on income shifting; is aware of the disquiet expressed at the proposals by small businesses, the self-employed, freelancers, accountants and other affected parties; is concerned that the new tax will make it impossible for jointly-owned businesses to self-assess their tax liability with any certainty; observes that ever since the introduction of the independent taxation of spouses, it has been standard practice for married couples to own businesses jointly, that this was recommended by the Government for many years and that people who followed this advice now face being penalised; is concerned that the proposals are in direct conflict with the Government’s stated aim of encouraging enterprise and small businesses; observes that the new proposals will be inconsistent with divorce law and capital gains tax, so that spouses will be entitled to an equal share of the value of a business when they divorce, or of the proceeds from it when sold, but not of the profits while it is operational; and urges the Government to reconsider its proposals ahead of the Budget.
I ask you, who wouldn’t sign a motion against such a crazy proposal? As of writing, there are 128 signatures. Conservative 66, Labour 13, Liberal Democrats 45, Plaid Cymru 1, SNP 3.
My own MP hasn’t signed, so I wrote him a letter to make him aware of the motion and requesting his support. If I hear back from him (or if I hear nothing), I will post his response on my blog:
Dear Mr Gerald Howarth MP,
I am writing to you to make you aware of the new “Income Shifting” stealth tax that is due to mean a significant yet unspecified tax increase on small businesses this year. The legislation targets jointly-owned businesses where profits are distributed equally between a husband and wife, other family members or close contacts that are not deemed to be “at arms length”.
Unfortunately this legalisation being rather rushed as it is, fails to define what “at arms length” actually means. Further, it fails to recognise family investment in small business and seeks to redefine family businesses as not valid businesses.
The Treasury are also seeking to determine that small businesses pay a “market salary” to its owners, without stipulating or providing guidance on what the “market salary” should be for each type of business. Further, I suspect, that paying “market salary” would put many of us out of business, since small businesses cannot sustain the same salary packages as the large corporations.
This uncertainty will lead to businesses being buried in red tape and paperwork with no way to self-determine our tax liabilities, leaving us open to unfair and aggressive tax investigations.
The Treasury has announced that the Budget, which is expected to contain information that the new tax will be introduced, has been scheduled for March 12th.
There is further information about the “income shifting” Family Business Tax at: www.familybusinesstax.co.uk
We and other small businesses in your constituency, need your signature to support Early Day Motion 714 against the proposals.
I will be posting up this letter to you and your response on my blog at:
I trust that we can count on your support for this motion?
Warm Regards,
Mike Wilson
Director - Evolved Software Studios Ltd
Director - Status Check Ltd
Are you affected by this Government’s naive and rushed taxation policy? Please consider contacting your Member of Parliament and asking them to support the Early Day Motion 714 against these proposals, you can view this motion and see those who have supported it, here:
http://edmi.parliament.uk/EDMi/EDMDetails.aspx?EDMID=34871&SESSION=891
edit: 4th March 2008: Gerald Howarth signs the Early Day Motion 714. His response to my letter above is now published at: http://blog.evolvedsoftwarestudios.com/2008/03/05/income-shifting-a-response-from-gerald-howarth-mp/
