Tax slalom

fat.bloke_2

I have come to a pleasant point in my life where for the first time I may have the opportunity to fend off the tax man. Not sure how to start and maybe someone out there can advise me. I am about to have 4 income streams the first will be my job, the second will be a pension plan that is about to start paying out, the third is a holiday let and the fourth is a part time post that I am looking into. The 2 jobs and the pension will be taxed at source but the income from the holiday let (which I hope to build into a bigger business with my wife as a partner). How can I flex as much money out of the tax man as possible? I have thoughts on making myself a company to manage me, or possibly making my wife the company to manage us both - or do I just suffer the loss of 40% of everything we earn. She has no other form of income yet I still pay all the tax, surely there is a way of sharing the load.......

Ian_W

fat.bloke wrote: or do I just suffer the loss of 40% of everything we earn.

With your personal allowance and the lower tax bands you can earn almost £40k per annum before you pay tax at the higher rate - hardly "everything" you earn!

Don't know how you would turn yourself or your wife into a company to manage either of you or both! Don't make sense to me, maybe some accountant or expert could fathom out an answer.

However, as you rightly identify 3 out of your 4 incomes will be taxed at source. If the holiday let is profitable why not do the accounts for that in your wife's name thus allowing her nil and lower band tax rates to be used against the profits of the business? When we had a holiday let abroad the IR were quite happy for it to be declared by one of us despite being in joint names.

sarahlouise210

Ian_W wrote:

. If the holiday let is profitable why not do the accounts for that in your wife's name thus allowing her nil and lower band tax rates to be used against the profits of the business? When we had a holiday let abroad the IR were quite happy for it to be declared by one of us despite being in joint names.

It would be acceptable to share your holiday let income with your wife and therefore get the benefit of her tax free allowances..but..if the income is in both your names and you both receive the income the HMRC will not be "quite happy" for your wife to declare 100% of the income received thereby you avoiding your 40% share! The only way round it would be for the income to ONLY be your wifes income.

pchelpman

fat bloke....some thoughts.

Always ask yourself the question "what would the Revenue say if they knew all the facts?". Chances are they would charge tax accordingly.

So....on the basis that the income is taxable in proportion to the capital invested....if the let property is owned equally the Revenue would be looking for declarations of half the profits each.

However, if, say, your wife put in 80% of the funds to aquire the let property then she could declare 80% if the income profits on her own self assessed tax Return, no problem.

Just be careful. The Revenue always look to the rightful "owner" of the income source to declare the money on their own Return. If, in reality, you own/earn the income from any given source you can't just chose to declare that income on someone else's Return.

My advice is go pay for tailor-made tax planning advice from someone properly qualified. I would recommend someone from the CIOT or ATT. Websites here.....

CIOT > http://www.tax.org.uk/showarticle.pl?id=3334&n=10000

ATT > http://www.att.org.uk/showarticle.pl?id=9&n=1004

Hope this helps.