At the recent emergency budget, there was one piece of good news - from 5th April, 2011, personal tax-free allowances are to increase by £1,000. However, higher rate tax payers will not benefit as the cut-off point at which higher rate tax applies will be lowered.
Nevertheless, it is appears to be an opportunity to shift income between spouses and life partners to reduce combined tax bills by up to £400. This can achieved through use of a partnership, limited company or a sole trader paying a wage to a spouse/partner.
We need to wait for the Autumn Pre-Budget report for confirmation on the point at which higher-rate tax applies and then we will issue further advice.
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