Family-owned businesses will face higher tax bills under proposed HM Revenue & Customs legislation.

The new rules aim to tackle a House of Lords decision that allowed husband-and-wife team, Geoff and Diana Jones, to take income from their IT business in a way that minimised their tax payments. Under the proposed legislation businesses such husband and wife teams as well as other family businesses will have to prove how they pay themselves or face hefty fines.

“The Government believes that income shifting, the process whereby an individual gains a tax advantage by artificially shifting part of their income to another person who is subject to a lower rate of tax is unfair,” said a spokesman for the HMRC. “The majority of individuals cannot shift their income.”