MTD (making tax ....difficult)

Walesman

Hi all, so I have run a small energy survey/air pressure business since 2010. Never needed an accountant as quite simple ingoing's & outgoings, (nothing digital 100% pen & book), but as my turnover is north of £50k I have started to prepare for MTD.
I have downloaded Free agent as I get it free with biz account (Natwest).
Can I ask you wise chaps a few Q's of which I am unsure of?

1, Until now I have not given tax much thought, just run it as a sole trader, but as I was looking into this I wondered if I should create a partnership with the Mrs? She does 40-50% of the work inputting the data, handling complaints & booking the jobs. She is also older than me & receives a state pension, currently I pay her a wage £200 per month, but I wonder now if a partnership would benefit us for tax purposes (I understand that we would both need to complete tax returns + the biz).

2, if I did venture down this route is now the time for an accountant? I am under the £90 Vat threshold but this free agent inputting worries me slightly given I am a pen & book man currently.

Thanks

Bookworm225

Freeagent is very easy to use
it also helps greatly if you link your nat west account to it (that link needs to be renewed every so often but is only a click to do so) as then all your bookkeeping is but a single click to "explain" (ie categorise) the entry. No need to spend money on pen and ink and getting writers cramp or making mistakes that need rubbing out on bits of paper.

if you need further help ask on here. I've been using FA for years 

Jeremy535897

I assume you are both basic rate taxpayers? Making her a partner could have the advantage, assuming she reached pensionable age before 6 April 2025, of reducing the class 4 NIC bill you pay in 2025/26 (you pay 6% on profits over £12,570, she wouldn't pay any), but not worth it if she gets into higher rate tax. She would have unlimited liability for partnership debts though alongside you.
You could also avoid MTD for income tax for the foreseeable future, as partnerships are not in MTD yet, nor is there any sign of them coming into MTD.

Walesman

Jeremy535897 said:

I assume you are both basic rate taxpayers? Making her a partner could have the advantage, assuming she reached pensionable age before 6 April 2025, of reducing the class 4 NIC bill you pay in 2025/26 (you pay 6% on profits over £12,570, she wouldn't pay any), but not worth it if she gets into higher rate tax. She would have unlimited liability for partnership debts though alongside you.
You could also avoid MTD for income tax for the foreseeable future, as partnerships are not in MTD yet, nor is there any sign of them coming into MTD.

Hi Jeremy, thank you for your reply this is very informative.
Especially that I can (for now), avoid MTD.
I am higher rate tax payer & Mrs only currently receives her state pension & an amount I give her as a wage (basically it totals £12.5k). 
I never gave this year (25/26), much thought just considering this due to MTD. Would I need to inform HMRC of a partnership immediately or when I fill in the return?
Given the Mrs is already using her taxable allowance I was thinking of a partnership 60/40 (me/her).
Finally is there anything other than the liability that I would need to consider & roughly how much do accountants charge? As I have no clue as I have never needed one before now.

Jeremy535897

If you have filed your tax return for 2024/25 with a turnover over £50,000, then HMRC will expect you to do MTD filiong from 6 April 2026. But if you set up the partnership no later than that, you wouldn't actually have anything to file. Quite how HMRC will deal with that I'm not sure. It might be best to set up the partnership sooner rather than later. Your wife would have to register for self assessment, and you would have to register the partnership. I assume you are not registered for VAT?
See https://www.litrg.org.uk/working/partnerships Your wife will also have to register for self assessment. There is a link to that in the above link. She should have no class 2 and no class 4 NIC liability assuming she was of pensionable age on 6 April 2025. Doing the accounts for a partnership is no harder than doing them for a sole trader.