Budget (8): Section 660 'jointly held shares'

The Chancellor has closed one of the perceived ‘loopholes’ to avoid Section 660, the so-called business tax between family and friends by planning. It plans to introduce legislation on married couples’ jointly held shares.

Some tax experts believed that jointly held shares was a way of staying outside Section 660. While this was never certain one way or the other…it is now!

In BN5 the Treasury said:

Jointly owned assets

From 6 April 2004, the Government will legislate to ensure that married couples will be taxed on dividends from jointly owned shares in close companies (mainly companies owned by their directors or five or fewer people) according to their actual ownership of the shares.

For example if a spouse is entitled to 95 per cent of the income from some jointly owned shares they will pay tax on 95 per cent of the dividends from those shares. This closes a loophole currently being exploited by owners of close companies, and will not apply to income from jointly owned shares in non-close companies or to other assets in joint names such as rental property.