self employed and gifts

billycasper_2

Hi,
My other half is self employed and currently i help with the book work and paperwork. I doesnt take me long but my wife wanted to pay me . My question is this
If rather than giving me money for this help she gave me a gift (lets say a bottle of wine)
What are the tax implications ?

CLAPTON

if she charges it as a business expense then she needs to justify it to the HMRC and you will need to declare it as an income ...

otherwise if it is out of her 'profit (i.e after tax has been paid) then she can give you anything she likes without tax implications.

billycasper_2

MM.. well how do i declare a bottle of wine ? Is it just the value of the gift that i have to declare.
What about corporate gifts ?

CLAPTON

If you are paying someone for services provided, then the value of the gift is a benefit in kind for the recipient and is taxable of course.

What about corporate gifts?

billycasper_2

But what if i dont know the value of the gift or payment in kind ? it would be rude to ask.

When can a business make a gift to someone and it not have tax implcations for the recipient ?

CLAPTON

just do it out of taxed profits... there's no restriction about giving your own money away...
but if you want to reduce the tax payers take then you must have a legitimate reason... if he provides genuines services (as I would say he does) no problem but he must declare as income... only fair really.

CLAPTON

ps ... what sort of money are we talking about here?

stratty

As your other half is self employed this isnt exactly true.

The test for self employed expenses being wholly and exclusively for the business is less strict than a ltd company which is wholly, exclusively and necessarily.

stratty

claim for the gift and worse case HMRC may choose to reassess it. no big deal really.

Pennywise

stratty wrote: »

As your other half is self employed this isnt exactly true.

The test for self employed expenses being wholly and exclusively for the business is less strict than a ltd company which is wholly, exclusively and necessarily.

Not true either. For the limited company to claim the expense, it continues to be wholly and exclusively. It is where the employee/director of a limited company incurs an expense, any reimbursement is only tax-free if the employee/director incurred it wholly, exclusively and necessarily. The easy way is to make sure that the company pays for anything that isn't "necessary" directly itself and not via its director/employee.

stratty

Pennywise wrote: »

Not true either. For the limited company to claim the expense, it continues to be wholly and exclusively. It is where the employee/director of a limited company incurs an expense, any reimbursement is only tax-free if the employee/director incurred it wholly, exclusively and necessarily. The easy way is to make sure that the company pays for anything that isn't "necessary" directly itself and not via its director/employee.

If you want to get tax relief on the expense then the rule is true and this is what I am getting at.