Year End Tax Review 2009/2010 Contents Lead articles The year ahead... This year, next year Pension hit Employees Too much NIC NIC and pensions Company cars Tax-free benefits Business - General Time to incorporate? His and hers Family bonus Profit and loss Show me the money Can't pay, won't pay? Turning back the clock Business - VAT Standard VAT or flat VAT? VAT goes down - must come up? European revolution A good start for VAT Happy returns? Investments Top-up savings Rainy day money Capital Gains Gains favoured Splitting gains A place in the country Holiday lets end Families Family fortunes Where there's a Will Credits and debits Piggy banks Still trustworthy? Administration Penalty shoot-out Paperwork, paperwork Pay tax later Opportunity knocks again Charity Give and save Non-Domiciled People Home and away Interest Interesting times

His and hers Because husbands and wives are separately taxed, they can split certain types of income between them to take better advantage of their personal allowances and tax rates. HMRC may question this - for example, if one employs the other in a business and pays a salary, the salary can't be excessive for the duties involved. If one gives income-bearing investments to the other, it has to be an "outright gift" of something which is not "wholly or mainly a right to income" - a proper capital asset. HMRC took a case to the House of Lords in 2007, trying to show that the income from a "husband and wife company" should all be taxed on the husband. They lost, and immediately said they would change the rules so they would win next time. Their proposals were so complicated that they decided to put them off, and later the Chancellor announced that a recession is not the time to bring in a measure that would be likely to damage small businesses. Tax advisers say there is never a good time to bring in such a rule, but HMRC seem keen to revisit this at a later date! In the meantime, husband-and-wife businesses have a breathing space in which the tax saving still works - within limits. It's still important to know what works under the current rules and what the taxman can already object to. Action Point! Do you jointly own a business with your spouse?