payments to spouse for household expenses

MobileSaver

Keep_pedalling said:

MobileSaver said:

StitchInTime99 said:

since she was spending this 30k on her living costs, it meant her own income was not spent by her.

Was National Insurance and Income Tax being paid on that 30k? If not then it wasn't income and so the wife must have been using her own income for the gifts...

Not all income is subject to those taxes, State pension and  Interest and dividends on ISAs for instance. Both those are classed as income. Gifts from a spouse however are definitely not income.

Agreed, that was the point I was making; if it was genuine income paid by the hubby to his wife then NI and PAYE would have been paid, if they weren't then you'd have an almost impossible job to persuade HMRC that they were anything other than gifts.

StitchInTime99

MobileSaver said:

Keep_pedalling said:

MobileSaver said:

StitchInTime99 said:

since she was spending this 30k on her living costs, it meant her own income was not spent by her.

Was National Insurance and Income Tax being paid on that 30k? If not then it wasn't income and so the wife must have been using her own income for the gifts...

Not all income is subject to those taxes, State pension and  Interest and dividends on ISAs for instance. Both those are classed as income. Gifts from a spouse however are definitely not income.

Agreed, that was the point I was making; if it was genuine income paid by the hubby to his wife then NI and PAYE would have been paid, if they weren't then you'd have an almost impossible job to persuade HMRC that they were anything other than gifts.

It was definitely genuine income of the husbands. Income tax was definitely paid on it at higher level. I'm not sure about NI but he had an accountant so I am sure they would have taken care of that if it was due.

This is still our confusion. Can the wife pay the household expenses using his 'income'. He is sort of paying the bills and groceries but via her.

Keep_pedalling

StitchInTime99 said:

MobileSaver said:

Keep_pedalling said:

MobileSaver said:

StitchInTime99 said:

since she was spending this 30k on her living costs, it meant her own income was not spent by her.

Was National Insurance and Income Tax being paid on that 30k? If not then it wasn't income and so the wife must have been using her own income for the gifts...

Not all income is subject to those taxes, State pension and  Interest and dividends on ISAs for instance. Both those are classed as income. Gifts from a spouse however are definitely not income.

Agreed, that was the point I was making; if it was genuine income paid by the hubby to his wife then NI and PAYE would have been paid, if they weren't then you'd have an almost impossible job to persuade HMRC that they were anything other than gifts.

It was definitely genuine income of the husbands. Income tax was definitely paid on it at higher level. I'm not sure about NI but he had an accountant so I am sure they would have taken care of that if it was due.

This is still our confusion. Can the wife pay the household expenses using his 'income'. He is sort of paying the bills and groceries but via her.

No, I think it is pretty clear that she has a certain amount of income and a certain amount of expenditure and these are the two things HMRC will need to see if you are claiming gifts from income. What she received from her husband is not income so cannot be used in the equation. They really should have spent a little bit of this income on professional advice from an expert in IHT planning. 

If you try to claim this as an executor you could end up in a whole heap of trouble, just except they messed up a pay the tax due. 

Phoenix72

Keep_pedalling said:

MobileSaver said:

StitchInTime99 said:

since she was spending this 30k on her living costs, it meant her own income was not spent by her.

Was National Insurance and Income Tax being paid on that 30k? If not then it wasn't income and so the wife must have been using her own income for the gifts...

Not all income is subject to those taxes, State pension and  Interest and dividends on ISAs for instance. Both those are classed as income. Gifts from a spouse however are definitely not income.

State pension is subject to Income Tax.

mybestattempt

Phoenix72 said:

Keep_pedalling said:

MobileSaver said:

StitchInTime99 said:

since she was spending this 30k on her living costs, it meant her own income was not spent by her.

Was National Insurance and Income Tax being paid on that 30k? If not then it wasn't income and so the wife must have been using her own income for the gifts...

Not all income is subject to those taxes, State pension and  Interest and dividends on ISAs for instance. Both those are classed as income. Gifts from a spouse however are definitely not income.

State pension is subject to Income Tax.

Semantics perhaps, but state pension is chargeable to tax but not always subject to tax.

No tax is deducted from it when paid. All, part or none of it may be subject to a charge to tax.  


On the issue of the money passing between the spouses I  understand the confusion, however, my view is it cannot have been gifted as the husband gave his wife that amount to be used to cover part of their joint normal expenditure. 

lisyloo

But the first post says "she used the transfer from husband to pay all of her 'living costs' car, clothes, food etc (husband settles all utility and other bills)."

he's already settled some of the bills.