Reply to: Do I need to hire accountant on an ongoing basis for my simple case?

[Scruff]

Sockie 🔔🔔🔔

[code46]

But it also has exceptions..

BIM22020 - Meaning of trade: exceptions and alternatives: betting and gambling - spread betting

Yes, I'm aware of the exception and most long term spread bettor do. Both you and TheCyclingProgrammer mentioned that in your post. Admittedly, if there is no ambiguity at all, there won't be any discussion/debates on the trading forums at all.

I appreciate your input on this thread, many thanks!

[code46]

No she isn't. For legal purposes you have to be married or civil partnership. It doesn't matter what you consider it as.

No, she isn't. I understand that. I was just answering the raised question on what if our relation split.

Listen... nearly every response you have given has ended with a question. This is exactly why you need a accountant. Enough asking questions from people who don't know your situation and to be honest don't really care. Go get some professional advice. Speak to the Umbrellas and ring a couple of the accountants that post here and ask them. You are just getting yourself confused and getting no where here.

You made your point very clear. If I now decide to back to the umbrella company road, I might not need to talk to any accountant at all. The client company has a umbrella company they trust and always suggest to use. I'd happy to go with whoever the client is happy with, as I don't think the umbrellas make great differences if go this route.

[northernladuk]

I'm doing spread betting. BIM22015, among others, is about it.

The same topics been discussed on forum like trade2win repeatedly, which arguably means there is still different interpenetration of the actual wording, but most people believe it's tax free (unless your trade is not gambling itself but selling service related to gambling). Several people wrote to HMRC and got positive answers in written, then framed the papers and hang them on the wall at home

But it also has exceptions..

BIM22020 - Meaning of trade: exceptions and alternatives: betting and gambling - spread betting

So the devil is in the details and YET ANOTHER reason you need to get an accountant. The message couldn't be clearer.

[code46]

HMRC see seem to be pretty clear. What isn't clear is what the OP means about gambling. Tax on winnings from betting isn't taxable. If it is connected to his trade then it is.

BIM22017 - Meaning of trade: exceptions and alternatives: betting and gambling - the professional gambler

BIM22015 - Meaning of trade: exceptions and alternatives: betting and gambling - introduction

BIM22019 - Meaning of trade: exceptions and alternatives: betting and gambling - element of existing trade

As ever it is down to the details. Gambling winnings are not taxable is both right and wrong. More detail is required to answer.

I'm doing spread betting. BIM22015, among others, is about it.

The same topics been discussed on forum like trade2win repeatedly, which arguably means there is still different interpenetration of the actual wording, but most people believe it's tax free (unless your trade is not gambling itself but selling service related to gambling). Several people wrote to HMRC and got positive answers in written, then framed the papers and hang them on the wall at home

[northernladuk]

True, would consider contracting with other companies in the future, but granted this is something to watch out.

Yeah, might go with umbrella eventually, but it's fascinating topic to discuss. So using an umbrella company, I'm basically just employed by the umbrella company and pay even higher tax than normal permanent employees do (due to employer NI contribution and margin)? Dame, in that case I'd seriously consider to reduce my working hours and give self more free time instead. Is there anything I can choose/control regarding payment/tax, or nothing at all?

Ask your accountant.

[code46]

Maybe but you have to be careful. If all they want is the flexibility but everything else is as it would be for a permie then you will fall inside IR35 which will change things considerably. It's a horribly grey area but if the client wants a perm with flexibility you are going to have to be careful.

Another reason in favour of an Umbrella so you don't have to worry about it.

True, would consider contracting with other companies in the future, but granted this is something to watch out.

Yeah, might go with umbrella eventually, but it's fascinating topic to discuss. So using an umbrella company, I'm basically just employed by the umbrella company and pay even higher tax than normal permanent employees do (due to employer NI contribution and margin)? Dame, in that case I'd seriously consider to reduce my working hours and give self more free time instead. Is there anything I can choose/control regarding payment/tax, or nothing at all?

[northernladuk]

That is so incorrect in so many ways I don't know where to begin..... but as a hint I don't pay unexpected tax bills willingly...... However as its an aside to my argument that the OP does not professional advice I will leave it at that.

2 people say that gamblers don't need to pay tax on profits, one tax bill from the mid 0's says something very different.....

HMRC see seem to be pretty clear. What isn't clear is what the OP means about gambling. Tax on winnings from betting isn't taxable. If it is connected to his trade then it is.

BIM22017 - Meaning of trade: exceptions and alternatives: betting and gambling - the professional gambler

BIM22015 - Meaning of trade: exceptions and alternatives: betting and gambling - introduction

BIM22019 - Meaning of trade: exceptions and alternatives: betting and gambling - element of existing trade

As ever it is down to the details. Gambling winnings are not taxable is both right and wrong. More detail is required to answer.

[eek]

You could make regular winnings gambling as much as you like, it still won't be taxable. Gambling as a trade is only taxable if you are facilitating it (eg running a casino or bookmakers) or making money from other services related to it (eg pro poker player earning a TV appearance fee).

Gambling itself does not constitute a taxable trade.

Caveat: there might be some things that HMRC do not consider to be gambling even though they appear to be.

That is so incorrect in so many ways I don't know where to begin..... but as a hint I don't pay unexpected tax bills willingly...... However as its an aside to my argument that the OP does need professional advice I will leave it at that.

2 people say that gamblers don't need to pay tax on profits, one tax bill from the mid 0's says something very different.....

[northernladuk]

Thanks. Well, my partner is in fact my spouse, just not in the legal term. We've been together since 13, longer than the marriage of many couples. When she came with me to live in France and now UK, her VISA was always "defendant" as unmarried partner. One must provide stronger evidence to the immigration office to support this case, but it's not a problem for us, because we are in fact spouses just without registration.

No she isn't. For legal purposes you have to be married or civil partnership. It doesn't matter what you consider it as.

Listen... nearly every response you have given has ended with a question. This is exactly why you need an accountant. Enough asking questions from people who don't know your situation and to be honest don't really care. Go get some professional advice. Speak to the Umbrellas and ring a couple of the accountants that post here and ask them. You are just getting yourself confused and getting no where here.

[code46]

What investment is your partner going to be making in setting up the company? Your initial outlay, as a guess is going to be a maximum of £5k. If they own half the company, they would be expected to put up £2.5k. And in return for this "investment", you are going to give away 50% of the company.

Does the actual number matters? I had colleague set up his own company with one single share cost one pound. Can I just set up a company with 100 shares each worth 1 pounds and me and my partner pay 50 pounds each? My understanding is the share price than grows/declines in proportional to the company's actual worth, doesn't it?

So, you are giving away a significant percentage of your future earnings to someone for a very limited investment. There is nothing to stop you doing that - you could give / sell that kind of stake to anyone you want to - find someone random to sell it to and you're fine. The problem comes from the perception that the income that they derive from that share can return to you, which means that you may have avoided paying tax on what would have been due if you had remained 100% owner of the business. It becomes difficult to prove that you haven't received any benefit from the money (particularly if you have a joint bank account).

Thanks for reminding me of this. So there is no regulation to forbid you actually start up a business together with your wife/partner given if you are indeed setup the business and run it together and has indeed equal share of responsibility and functionality in the business and your expenditures separate ? I understand it's difficult to justify in the case of contractor I guess, just want to know whether my understanding is correct?

Two more things to consider. Firstly, as NLUK says, at the level you are talking about, is there any financial benefit in having a split ownership? Secondly, what happens if you separate - she now has half the company and rights to half the dividends that you declare from now on.

Thanks. Well, my partner is in fact my spouse, just not in the legal term. We've been together since 13, longer than the marriage of many couples. When she came with me to live in France and now UK, her VISA was always "defendant" as unmarried partner. One must provide stronger evidence to the immigration office to support this case, but it's not a problem for us, because we are in fact spouses just without registration.

[northernladuk]

Yes, but it's only saying I don't have to depends on the contracting work income to cover my daily living cost. The client wants to hire me as long as possible, at least for the recent one year or two, but I don't want to work full time/year for them at least. That's the reason why they have to hire me as contractor, because it's difficult for them to hire permanent employee with that flexibility.

Maybe but you have to be careful. If all they want is the flexibility but everything else is as it would be for a permie then you will fall inside IR35 which will change things considerably. It's a horribly grey area but if the client wants a perm with flexibility you are going to have to be careful.

Another reason in favour of an Umbrella so you don't have to worry about it.

[code46]

Sounds like the OP is not on UK passport and requires a visa/partner requires a visa, in order to secure ILR?

If I were the OP, I would not bother with a "local accountant", but would consult with a UK based Accountant, who specialises in Contractor Accounting, as well as an Immigration Attorney.

If it walks like a duck, looks like a duck and quacks like a duck...

Not UK passport, but UK residence with a work VISA in last years, now got IRL. So "local" in that post means somewhere in the UK,

[code46]

If the OP is indeed only doing a few months contracting here and there then isn't he best going Umbrella? Wasn't it said Umbrella can be better for incomes of under £30k. Would be much much simpler and easier than running an LTD for 3 months.

Yes, with the helpful discussion here, I'm indeed reconsidering umbrella company again. Though I had made some point it's not only about tax so I'll need another thought.

Also I didn't remember I said it was exact 3 month (maybe I used just 3 months as an example in some posts).

Also bearing in mind the low figures why is the OP even bothering with the dividends to his partner. He won't reach his own tax bands without needing his partner?

Yes, but it's only saying I don't have to depends on the contracting work income to cover my daily living cost. The client wants to hire me as long as possible, at least for the recent one year or two, but I don't want to work full time/year for them at least. That's the reason why they have to hire me as contractor, because it's difficult for them to hire permanent employee with that flexibility.

So I might work more months in the end, it up for negotiation. As I don't need the money immediately and I can just let the money sit on the company account (if I have one) and extract them gradually using my annual allowance if I no longer work as contractor in following years. Still it's always better to move money out to my personal account given if the cost is low and doesn't break any regulation. I hope that makes sense.

[TheFaQQer]

Thanks. Searched and read a few threads, many of them are about gifting spouse/partners the shares but not about establishing the company with shares split at the beginning, but I guess it's the same?

Also, I had the impression was because I previous saw a tons of books/articles advertise this spouses 50:50 scheme. I guess the difference which I didn't take into account before was, they might be talking about normal company (such as retail) so that your spouse might actually act as (or at least appear to be) a business partner running the whole business with you from day one, while in a contractor company it's quite clear that you are the one doing the work and your spouse is hardly justifiable as a crucial part of the business. Is that the root cause? otherwise I don't see why the law should stop a partner to hold shares as an initial founder of the company given if he/she invest money in and indeed run a retail business together with you.

What investment is your partner going to be making in setting up the company? Your initial outlay, as a guess is going to be a maximum of £5k. If they own half the company, they would be expected to put up £2.5k. And in return for this "investment", you are going to give away 50% of the company.

So, you are giving away a significant percentage of your future earnings to someone for a very limited investment. There is nothing to stop you doing that - you could give / sell that kind of stake to anyone you want to - find someone random to sell it to and you're fine. The problem comes from the perception that the income that they derive from that share can return to you, which means that you may have avoided paying tax on what would have been due if you had remained 100% owner of the business. It becomes difficult to prove that you haven't received any benefit from the money (particularly if you have a joint bank account).

Two more things to consider. Firstly, as NLUK says, at the level you are talking about, is there any financial benefit in having a split ownership? Secondly, what happens if you separate - she now has half the company and rights to half the dividends that you declare from now on.