Property entrepreneurs are to face higher tax bills under Treasury proposals published last week.

The rules aim to stop high-earning individuals from diverting income to another member of their family who can pay a lower rate of tax.

Douglas Marvin, finance and investment policy officer at the British Property Federation, said the legislation could discourage entrepreneurs.

‘The proposed legislation appears more widely drafted than necessary, but we hope this can be addressed through the consultation process,’ he said.

‘If genuine commercial business arrangements are caught by this legislation, it will be tomorrow’s business that suffers.

‘The property industry is known for its family businesses, particularly its brothers, the Livingstones, the Candys, the Reubens, the Tchenguizes to name but a few, all of whom would have started somewhere.’

Nick Braun, managing director of Taxcafe, said the changes will affect small businesses, but that ‘many property investors who own property jointly with their spouses may not be affected in practice’.

Nigel Barker, a private client tax partner at Deloitte whose clients include family-owned property companies, warned the rules would lead to more red tape.

‘It adds an extra degree of complexity to deal with,’ he said.

There is a consultation period on the draft legislation and the deadline for comments is 28 February.