Alan Pink looks at ways of reducing income tax on business income by spreading it amongst the family and others.
It is a common problem that the UK taxes families where there is only a single earner more heavily than where there are multiple earners.
A straightforward example of household income of £100,000 illustrates this. If there is a single earner, perhaps someone carrying on a business, who makes profits of £100,000, roughly half of this will bear income tax at 40%, whereas two earners making profits of £50,000 each will enjoy the basic rate of tax on all that income.
For this reason, it is common for people in business to look at ways of spreading the income from a business amongst more than one person. There are various ways of doing this, straightforward or not so straightforward, depending on how the business is structured.
