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UKSolicitorJA
UKSolicitorJA, Solicitor
Category: Law
Satisfied Customers: 4312
Experience:  English solicitor with over 12 years experience
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How can I earn modest amounts of money and pass the benefit

Resolved Question:

How can I earn modest amounts of money and pass the benefit direct to my student children, without taking any benefit to myself?
Submitted: 2 years ago.
Category: Law
Expert:  UKSolicitorJA replied 2 years ago.
-Could you explain your situation a little more?
Customer: replied 2 years ago.

I have a full time day job, income taxed at the 40% rate. I have an option to do some additional part time work generating a few hundreds of pounds, which I would like my student daughter to have the benefit of. If I do the work but the invoice goes from my daughter and the money is put in her bank account, without my having access to it, will it be part of her taxable income, not mine?

Expert:  UKSolicitorJA replied 2 years ago.
Hello,

You would need to declare the money as your income and pay tax on it as it would be tax evasion if you do not do that as you are the person working and earning the money in reality, not your daughter.

Your daughter may invoice for the money and the money may be paid in her account if the client agrees to this arrangement, but you would need to declare it as your income to HMRC.

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Customer: replied 2 years ago.

That is clear, thank you; and that is what I will do. However, my original question was 'How can I'; not 'Can I'. People - perhaps in the very high net worth category - seem to have mechanisms such as tax-efficient trusts and I had hoped you might suggest some optional soultions.

Expert:  UKSolicitorJA replied 2 years ago.
Trusts also have tax implications and most of these are set up offshore and involve hundreds and millions of pounds. The money in the trust is assumed to have been subject to tax in the first place by the maker of the trust.

Once you have paid tax on your income, you may set up a Trust in your daughter's favour with the money. You can get a local solicitor to set the Trust up for you for the benefit of your daughter.

There are various types of Trust, see here:

https://www.gov.uk/trusts-taxes/types-of-trust

You can choose whichever one fits your requirements.

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