Paying Spouse to reduce IT

bruckner · Postby **bruckner** » Thu Nov 30, 2006 12:06 pm

Thanks, so you meant Inheritance Tax, yes? Whereas I am asking about Income Tax. I don't want to make this any more complex than it has to be!
By the way, wif e has now sent me this e-mail re the online filing incentive:

"you can't possibly mean that a person who will not pay any tax anyway will be sent a cheque for Â£150 as a reward for filing online - that absolutely would not make sense

please re-read all of this string of mails in the correct order and then think about what your answer should be as I really cannot believe what you appear to be saying about this being an incentive for online filing"

Maybe you could clear this up John? Thanks again.

RMC · Postby **RMC** » Thu Nov 30, 2006 11:26 pm

For e-filing incentives see 1.7 at:-
http://www.hmrc.gov.uk/2006online/p35-payment-box.htm
It resulted in 10 fold increase in PAYE scheme registrations.

Peter D · Postby **Peter D** » Fri Dec 01, 2006 1:43 am

Hi Bruckner, Now I understand that you have a business thes yes you should pay her and John Perry has pointed out the benefit of exceeding the 5035 threshold to excite NI contributions. You may only be 50 but you should become IHT pro-active now and look at how you own the properties, i.e. in who's name. Take some professional advice and put IHT efficient Wills in place If you do nothing the Chancellor will take 40% of everything over 285K and if one of you walks in front of a bus and you have not taken action to use your 285K NRB your suviving spouses estate has a bigger burden. They say you can not take it with you but you can take 285K from under the IHT umbrella saying someone 40% on that. Regards Peter

bruckner · Postby **bruckner** » Fri Dec 01, 2006 1:53 am

Thanks again both. Peter - this is one for a bit later when I have got my head around various other aspects of marriage and taxation!
Many thanks,
Bruckner

bruckner · Postby **bruckner** » Fri Dec 01, 2006 2:07 am

Hi RMC - this has thrown us into more confusion! It is a Q&A page which does NOT actually explain what the incentive is for.
It now appears that it might be for online filing of a PAYE return as against a self-certified self-employed or property income return.
So could someone please state very simply what the incentive is actually for? Thanks.

Peter D · Postby **Peter D** » Fri Dec 01, 2006 3:05 am

Try
http://www.hmrc.gov.uk/employers/doiton ... 8_1-10.htm

Please do not bury your head in the sand regards your property ownership, your estate and IHT. Taxation is not a problem until probable until Jan 31st but IHT Planning is now. Regards Peter

ivorproblem · Postby **ivorproblem** » Sat Dec 02, 2006 5:21 pm

bruckner I have some concerns regarding your wages claim to your wife. You say that you intend to pay your wife a wage.If you intended to pay her say Â£4000 ie approx Â£80pw then at minimum wage levels you are saying she works for you 16 hours a week.What you havent told us is what you do for a living , which is relevant.Do you have an occupation which would merit engaging a female person 16 hours a week - most jobs wouldnt. The question they would ask is if your wife was off sick would you pay someone else the same amount to do the work ?And what would you tell the revenue she
does for her 16 hours a week ? You cannot claim to say you pay her Â£ 10-15 an hour because they would say that whatever her work was would have to be at an appropriate pay rate. If all she does is answer the telephone in your absence this is unlikely to be allowed as she is doing nothing more than any wife does for her hsuband. Quite frankly you are less likely to be picked up for enquiry if you made her a partner in the business and allocated to her say Â£ 4000 of your profits as they would not challenge this.

bruckner · Postby **bruckner** » Tue Dec 05, 2006 4:37 am

Thank you Ivorproblem; I have no experience of partnerships; the business is property rentals and upon further thought it is difi ult to pin down half the things she does. Some of the pay would be for actual work and some effectively as a retainer; how does hmrc feel about them?
My solicitor once told me never to get into partnerships as he sees the trouble they can cause, so I am reluctant to restructure like that, however if it goes through on the nod I should reconsider maybe. BTW the business in not a Ltd company so does that matter as regards your suggestion?
More to this than I ever imagined. Thanks everyone.
B

bruckner · Postby **bruckner** » Tue Dec 05, 2006 11:21 am

One further thought on ivor's suggestion: a profit share doesn't affect the net pretax profit, so how can it be as effective for me as a payment which is an above-the-line item and reduces my profits and hence my tax?

King_Maker · Postby **King_Maker** » Tue Dec 05, 2006 11:56 am

Because it reduces your share of the profit.