Reply to: Income Tax Return for Spouse

[xoggoth]

Phone up? I have always found their telephone support staff, unlike whoever writes their websites, to know their stuff.

[simondolan]

Terrible isn't it, it's almost as if their own staff can't be trusted to know the rules

[Clare@InTouch]

Are you suggesting Clare that our friends at the Revenue sometimes give conflicting advice? Whatever next........

Terrible isn't it, it's almost as if their own staff can't be trusted to know the rules

[simondolan]

The HMRC guidance does not fully reflect company law which is why you get differing opinions. Some will say to complete a tax return anyway as it saves arguing with HMRC at a later date (when their own staff likely don't know the difference between their guidance and the actual law) and some will tell you not to bother as it's not legally necessary.

Are you suggesting Clare that our friends at the Revenue sometimes give conflicting advice? Whatever next........

[Clare@InTouch]

So, as I suspected, we are in a grey area here. Different accountants offering different advice. I guess one can either take the advice or leave it. It seems a whole load of pain to start getting SA for the missus for no reason though!

The HMRC guidance does not fully reflect company law which is why you get differing opinions. Some will say to complete a tax return anyway as it saves arguing with HMRC at a later date (when their own staff likely don't know the difference between their guidance and the actual law) and some will tell you not to bother as it's not legally necessary.

[tractor]

So, as I suspected, we are in a grey area here. Different accountants offering different advice. I guess one can either take the advice or leave it. It seems a whole load of pain to start getting SA for the missus for no reason though!

I would say

"If you don't already complete a tax return, you'll need to do so if you receive any of the following:

•£10,000 or more income from savings and investments
•£2,500 or more income from untaxed savings and investments
•£10,000 or more income from property (before deducting allowable expenses)
•£2,500 or more income from property (after deducting allowable expenses)
•annual trust or settlement income on which tax is still due (even if you’re only treated as receiving this income)
•income from the estate of a deceased person on which tax is still due"

...is quite clear and unambiguous and yes, many people in the UK should but don't fill in an SA form annually. That is irrelevant though, according to the above guideline.

As the op stated "nominal dividends@10% through the year", if those nominal dividends are greater than the prescribed £10k, then the person is required to self assess.

[MickeyP]

No. HMRC website guidance on this as, one some other things, is totally wrong. You fill in a tax return if you may have an additional tax liability or they send you a form. That's it.

Tax returns for directors | AccountingWEB
Self-assessment | AccountingWEB

Similarly with registering with PAYE if a director. It is quite clear from their guidance that one should register even if not receiving salary or benefits but an accountant told me different and that view was confirmed by their online advisors. I wasted time registering my wife's businesss and then had to waste time ringing up to get the registration cancelled.

PS My advice is to always record conversations with HMRC helpline, insurance companies or anything else that may have future repercussions.

So, as I suspected, we are in a grey area here. Different accountants offering different advice. I guess one can either take the advice or leave it. It seems a whole load of pain to start getting SA for the missus for no reason though!

[xoggoth]

This should help you decide whether she needs to get on the annual treadmill or not

No. HMRC website guidance on this as, one some other things, is totally wrong. You fill in a tax return if you may have an additional tax liability or they send you a form. That's it.

Tax returns for directors | AccountingWEB
Self-assessment | AccountingWEB

Similarly with registering with PAYE if a director. It is quite clear from their guidance that one should register even if not receiving salary or benefits but an accountant told me different and that view was confirmed by their online advisors. I wasted time registering my wife's businesss and then had to waste time ringing up to get the registration cancelled.

PS My advice is to always record conversations with HMRC helpline, insurance companies or anything else that may have future repercussions.

[Nixon Williams]

Where do they state this Alan? Is it from the link posted earlier in this thread? ie:

"Income above a certain level from savings, investment or property
If you don't already complete a tax return, you'll need to do so if you receive any of the following:

•£10,000 or more income from savings and investments"

If so then surely this includes a huge amount of permie employees who I'm certain don't file a tax return.

Yes, the link provided earlier covers this subject. I would agree that there are alot of people who do not correctly declare their income to HMRC.

Part of the problem is that many accountants do not get their clients into the habit of following the correct procedure on declaring dividends and recording them etc. It is not sufficient to simply write 'dividend' on a bank statement nor just to enter an amount in a dividend column of a spreadsheet.

Therefore many people do not have easy accessible records of what dividends have been taken let alone declared.

Alan

[Craig@Clarity]

There was some debate about this previously which can be found here http://forums.contractoruk.com/accou...onsible-2.html

[MickeyP]

Where do they state this Alan? Is it from the link posted earlier in this thread? ie:

"Income above a certain level from savings, investment or property
If you don't already complete a tax return, you'll need to do so if you receive any of the following:

•£10,000 or more income from savings and investments"

If so then surely this includes a huge amount of permie employees who I'm certain don't file a tax return.

[Nixon Williams]

I thought you only needed to complete a return if her dividends take her over the higher rate tax threshold?

Or is this another grey area?

No, HMRC state that if the dividend income exceeds £10,000, then the tax payer must advise HMRC by 5th October after the end of the tax year.

You are probably getting at the point that if her only income is £10,000 in salary and £10,000 in dividends, then she will not have any extra tax to pay, assuming her salary has been correctly taxed.

Alan

[MickeyP]

You have not stated how much the dividends to your wife are, but if her total dividend income exceeds £10,000 per annum, then she will have to complete a tax return.

The date to advise HMRC of her requirement to complete a return is 5th October after the end of the tax year, so if she is liable for a return for 2010/11, get in touch with HMRC quickly.

Alan

I thought you only needed to complete a return if her dividends take her over the higher rate tax threshold?

Or is this another grey area?

[Nixon Williams]

Hi Guys,

Have this query around filing income tax returns for my spouse.
I am contractor and director within my own limited company with 90% stake. My wife is a 10% stakeholder.
I pay her out a salary of around 10K from the company and nominal dividends@10% through the year.
My query is should my wife file her income tax returns just like i do as a director. There are no other earnings for my wife :-(

I checked with my accountant and they recommend that my wife must contact the local tax office and let them know about the dividends she gets and they will be able to advise if she has to file tax returns or not.

I just wanted check what you guys do and the best possible option for this?

Thanks,
MS

You have not stated how much the dividends to your wife are, but if her total dividend income exceeds £10,000 per annum, then she will have to complete a tax return.

The date to advise HMRC of her requirement to complete a return is 5th October after the end of the tax year, so if she is liable for a return for 2010/11, get in touch with HMRC quickly.

Alan

[psychocandy]

Hi Guys,

Have this query around filing income tax returns for my spouse.
I am contractor and director within my own limited company with 90% stake. My wife is a 10% stakeholder.
I pay her out a salary of around 10K from the company and nominal dividends@10% through the year.
My query is should my wife file her income tax returns just like i do as a director. There are no other earnings for my wife :-(

I checked with my accountant and they recommend that my wife must contact the local tax office and let them know about the dividends she gets and they will be able to advise if she has to file tax returns or not.

I just wanted check what you guys do and the best possible option for this?

Thanks,
MS

No-one's asked you surprisingly what your wife does for the 10K a year salary? Be careful here if the answer is 'looks after the admin or does the book-keeping'...