Personal allowances and higher rate thresholds were increased in
line with inflation. The rates of tax for individuals are unchanged.
The benefit is in the region of £220 for a higher-rate taxpayer.
This benefit is much smaller for a person on a low income, but is
likely to represent a larger share of that person's tax bill.
The overall effect is complicated by the different rates which continue
to apply for general income, interest and dividends, and the possibility
that a separate claim may be made for tax credits to be repaid by
the Revenue. The calculation of the tax position remains as complex
Income split between husband and wife
Over the last year, the Inland Revenue have been giving publicity
to their views on some arrangements which save tax by splitting
businesses between husband and wife. The Revenue believe that they
often have the right to give the income back to the higher-rate
taxpayer who runs the business, cancelling the tax saving. Many
tax advisers think that the Revenue usually do not have that right.
The Budget does not contain any new measures about the basic argument,
but one method of avoiding it has been closed down: it was possible
to split income 50:50 for tax purposes by putting the shares in
the joint names of husband and wife, even if the actual split was
different. This will no longer apply to income received from a closely-controlled
company on or after 6 April 2004: the income will be split between
husband and wife according to their actual ownership of the underlying