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taxadvisor.uk, Chartered Certified Accountant
Category: Tax
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Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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My husband reached 65 last April he has a UK pension and Fire

Resolved Question:

My husband reached 65 last April he has a UK pension and Fire Brigade Pension.
We have a small business and was advised 10 years ago to add me to the accounts purposes.
I still work part time.
Should the business be solely in my Husbands name or joint.
The annual tax bill is less than £1500 a year.
Submitted: 2 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 2 years ago.

and welcome to the site. Thank you question.

If the business is small and your annual tax bill amounts to less than £1,500 a year, you may wish to keep the biusiness in his sole name as sole trader.

You have not stated whether you work part-time husband's business or employer.

You should consider drawing a salary from his business assistance you provide in the running of the business (salary below the threshold contributions).

If you were to become a partner, you would have to

- register assessment as a partnership

and file
- a partnership tax return
- individual tax returns showing your share of partnership profits.

These have costs associated with them if you were to engage a professional accountant to file the returns.

Personally, I doubt there would be significant saving in the tax payable if you were to make the business a partnership.

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 2 years ago.

I work part time Company and do not draw a wage from our business.

The business is a partnership business at present and has been years and I complete the self assessment and the partnership assessment.

Each year I have to pay tax and NI both with my own employment and business but as my husband turned 65 last year (2014) he has not had to pay NI and his tax element is taken from source - private and state pension.

Would this change if he changed the business to sole trader ie would he have a tax bill to pay each year instead of having the tax deducted automatically form his pensions.

Each year they cut his tax code accordingly so not sure if this is beneficial or not.

Expert:  taxadvisor.uk replied 2 years ago.
Michelle, thank you reply.

Lets consider the tax code...
This applies to salary/pension under PAYE. The reason of tax code could be change in actual pension received. State pension although received gross is taxable and personal allowance is set against this income first. Any balance is made available to offset other income under PAYE.

As far as taxation of profits from the business goes, you can opt to pay the tax in two instalments (Jan and Jul).

NI on self employment
If the business was sole trader and not partnership then you won't have to make any NI Class 2 and Class 4 contributions.
Your husband would be exempt because he is in receipt of state pension.

I hope this is helpful and answers your question.


If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 2 years ago.

Ok, with this in mind would the tax element be roughly the same amount 1 person as a sole trader as it has been people in a partnership.

The amount of tax we have paid each year does not vary much but I need to know if because my husband receives pensions it would make any difference to his tax obligation.

My earnings per year through my part time job are under £10000 and my husbands pensions total about £19500, so is it better to stay in the partnership due to my low earnings which offset some of the tax liability.

Expert:  taxadvisor.uk replied 2 years ago.
%Michelle, thanks reply.

You said in the introduction that your annual tax bill is under £1,500. I am not clear whether this figure refers to tax on profits of the partnership of total tax bill inclusive of all income.

If you were to provide me a figure , I would happily do a quick comparison.
Let's assume the profits are £7,500.
Your earnings from your part-time job covers your personal allowance and anything you get from the partnership would attract tax at 20%.

You could always work husband in his business and draw a salary if your part-time income is below the personal allowance.

Your husband's total income would be (19,500+7,500) = £27,000 and this after his personal allowance would also attract tax at 20%.

I hope this is helpful and answers your question.
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