Income shifting ― where are we now?

Copyright © 2026 LexisNexis
Produced by a Tolley Personal Tax expert
Personal Tax
Guidance

Income shifting ― where are we now?

Copyright © 2026 LexisNexis
Produced by a Tolley Personal Tax expert
Personal Tax
Guidance
imgtext

This guidance note looks at the how the settlement legislation may be applied to income shifting and how this has been viewed by the courts since the 2007 Arctic Systems case.

The settlement legislation is discussed in the Income shifting guidance note and it is suggested that the income shifting note would be a good starting point, before addressing the more specific comments on application of case law and HMRC guidance outlined below.

Overview

Arctic systems was a landmark case, and little substantive has happened in the years following. As this is still a key case, it is considered in detail below after a review of some more recent developments.

Some recent cases

There have been relatively few cases reaching the courts and each has turned on its own facts. They illustrate the likely challenges to income shifting arrangements and suggest a best approach to planning.

In Donovan and McLaren v HMRC, the issue was dividend wavers. Applying the guidelines in the Income shifting guidance note, it would come as no surprise

Continue reading the full document
To gain access to additional expert tax guidance, workflow tools, generative tax AI, and tax research, register for a free trial of Tolley+™
TAKE A FREE TRIAL NOW
Powered by Tolley+™
  • 10 Nov 2025 15:21

Home/ Tolley Tax Guidance/ Personal Tax / Family tax planning

Popular Articles

Corporation Tax

What are connected companies for loan relationship purposes ― practical approach

What are connected companies for loan relationship purposes ― practical approachBrief overview of the rulesThe loan relationships legislation applies to any ‘money debt’ arising from the lending of money entered into by a company, either as a lender or borrower. The rules are contained in CTA 2009,

20 Apr 2021 16:00 | Produced by Tolley Read more Read more
Owner-Managed Businesses

Capital allowances on cars

Capital allowances on carsSummary of capital allowances on carsThe current capital allowance rates applicable to cars are as follows:Pool typeDescription of carRateLegislationMain rate poolNew and unused cars with CO2 emissions of 50g/km and below 18%CAA 2001, s 104AASecondhand cars with CO2

14 Jul 2020 11:08 | Produced by Tolley Read more Read more
Corporation Tax

Withholding tax

Withholding taxIntroductionUK tax must be withheld on UK payments including:•interest•royalties•rental incomeUK withholding tax may be reduced under the provisions of a double tax treaty (DTT). Prior to 1 June 2021, payments of interest and royalties made to EU resident associated companies were

14 Jul 2020 14:01 | Produced by Tolley Read more Read more