How does this sound?

dungie203

Im currently in a business partnership with my wife. We do not earn alot but we were going to stick it out and try and make the business grow. Due to tax credits changing to Universal Credit we have decided that i should get a job and my wife should keep the business going on her own on a smaller scale.

Im thinking though that we should end the partnership and my wife should go self employed because i will end up paying tax on my small share of the partnership profits because of my job wages. These profits will probably be under the tax threshold for my wife alone so this seems to make sense to me.

Does my thinking on this matter make sense and is this above board?

chrismac1

You are permitted to share partnership profits in any ratio. If you want to go 100% you and 0% your wife in 2014-15 then 0%-100% in 2015-16 then back to 100-0 in 16-17 and so on, that is just fine.

Does this make your decision easier?

dungie203

Yes it does.

So for example on my self assessment i put my share of partnership profits as £0, i just then fill in an employed page and put down my earnings and tax already payed on that. On my wifes assessment i can put down 100% of partnership profit. On partnership return i just put my share as zero and my wifes for 100% of profit?

Do you have to inform HMRC about any of this?

dungie203

Also can i keep putting my wife down for 100% and me 0%? I doubt she will be earning more than the tax threshold for 2-3 years so i obviously i do not want a share of the profits because i will have to pay tax on it.

laticsforlife

You clearly don't need our help as you've managed to answer your own questions :-)


On the partnership return you will have 3 bits, the partnership profit X, then your share Y and your wifes share Z , and yes you can have any %age you like and in terms of 'telling' HMRC, you just did on the return, that's it.


Then yes you add the employment page and as that's been PAYE'd you should end up with no tax bill.


And if the level of the profit allocated to Mrs dungie203 is under the tax threshold as you think, then she'll also suffer no bill.

Pennywise

Just remember the NIC thresholds are a lot lower than the tax thresholds, so she may be liable to class 2 and/or class 4 national insurance even if her profit share is less than the £10k tax allowance.

dungie203

laticsforlife wrote: »

You clearly don't need our help as you've managed to answer your own questions :-)


On the partnership return you will have 3 bits, the partnership profit X, then your share Y and your wifes share Z , and yes you can have any %age you like and in terms of 'telling' HMRC, you just did on the return, that's it.


Then yes you add the employment page and as that's been PAYE'd you should end up with no tax bill.


And if the level of the profit allocated to Mrs dungie203 is under the tax threshold as you think, then she'll also suffer no bill.

Ok thanks, i take i still also have to fill in a partnership page for my self assessment also like normal and just put £0 as my share and the full amount for the wifes share?

So my self assessment will then have a partnership page and an employment page? Im probably answering my own questions again, i have a habit of doing that lol.