Chancellor delivers blow to family firms

The Chancellor's Pre-Budget report has dealt a hammer blow for family-owned firms, including optical practices, after he announced that there will be a ban on so called 'income-shifting arrangements'.

In his statement to the House of Commons on Tuesday, Alistair Darling said the ban would raise around £485m in revenue by 2011.

This move will allow HM Revenue & Customs to clamp down on married couples who set up their practices around one spouse's work. This measure also overturns a House of Lords decision on the landmark Arctic Systems case in July.

The Chancellor said the 'draft' legislation would be announced shortly but is likely to come into force in 2008-2009 allowing tax officials to require businesses to ensure that shareholders and partners are receiving a share of the profits that are line with their contribution to the business.