This legislation deals with income that arises for one indiviudual but is allocated to another, this is known as settlement.

The legislation is intended to stop an individual settling his or her income to another person to lower their tax burden.

For a long time Contractors have commonly set up a company and with joint ownership with their partners, allocating income to each director even though only one member is actually completing any work, the tax savings are great but the legislation clearly states that this is not acceptable.

HMRC have the ability to apply these rules to the previous six years' income if you are discovered to have settled income to a non-working director or shareholder. It is important to remember that this legislation only applies to the non-fee earning and IR35 has no implications.

Please contact Castlemaine Associates on 0870 778 0063 for more information.