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Proposed tax law changes 'could affect small business-owning couples getting a divorce'

07 February 2008

A group which represents the interests of small businesses in the UK has said that proposed changes to tax laws could end up impacting on divorce cases when both partners worked in the same business.
 
The Federation of Small Businesses (FSB) is urging its members to petition their MPs to try to prevent the government changing tax laws so that income shifting is forbidden.
 
The government has claimed that "income shifting, through which one individual can shift their income to another in order to gain a tax advantage, leads to unfair outcomes" and is currently consulting on draft legislation to prevent it.
 
However, the FSB has now pointed out that any changes to the tax laws could impact on couples who own a small business but subsequently get a divorce.
 
The group claimed that the new law would "mark a sharp divergence between tax law and divorce law".
 
It explained: "A spouse might be entitled to over half the value of a business in a divorce, while in marriage they may not be entitled to share any of the profits."
 
The consultation process on the proposed legislation is due to be completed on February 28th. 
 

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