§ The Paymaster General(Dawn Primarolo)
Legislation to prevent tax avoidance through manipulation of partnership losses is to be included in the Finance Bill 2004. The legislation will apply to individuals who do not spend a significant amount of time in the partnership trade. For trading losses which arise in any of the first four years that a partner carries on a trade, relief for set-off against other income will be limited to the partner's financial contribution to the business. It will also ensure that where a partner claims trading losses against other income and then disposes of rights to future income, a charge to income tax arises on the disposal. The changes will have effect from today.
A copy of today's Inland Revenue News Release giving the relevant background to this measure is being deposited in the Libraries of both Houses and is also accessible on the Inland Revenue website:http:// www.inlandrevenue.gov. uk/.