Businesses 'must be prepared' for income shifting changes

The UK's small business community has been urged to get ready for the new legislation on income shifting, set to be introduced in April.

According to Accountingweb.co.uk, "many businesses will be affected, not just those run by spouses or civil partners", suggesting that all companies should aim to familiarise themselves with the new system before it comes into force.

The Institute of Chartered Accountants in England and Wales (ICAEW) has issued some draft guidelines for businesses ahead of the changes, although the body is thought to still be concerned about the "broad" scope of the proposals.

Several of the country's tax organisations, including the ICAEW, are worried that the legislation "will impact on many businesses and be costly to self-assess", Accountingweb.co.uk reports.

The ICAEW has said that any change to tax on property income is an area of "particular uncertainty", because such income may be derived from a 'partnership' whereby the property is let under joint ownership.

Income shifting is the name given to a tax loophole which allows businesspeople, usually family members, to gain an advantage by splitting profits and dividends between themselves.