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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4196
Experience:  FCCA FCMA CGMA ACIS
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I receive annual royalties in respect of work done in the past.

Customer Question

I receive annual royalties in respect of work done in the past. Can I gift the right to some of those royalties to my spouse, and will she then have to assume responsibility for any income tax liability
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I am Keith, one of the experts on Just Answer, and happy to help you with your question.
Inter spousal gifts are beyond the scope of UK taxation so your wife is in the clear. You, however, are not and will be liable for UK Income Tax (IT) on all royalties received in each tax year. Unfortunately the transfer of these to your wife cannot be used to reduce your IT liability.
For example, your rental receipts can be logged against your wife's income if she can be shown responsible for management etc of the lettings, but for your royalty income this is clearly not possible. As suppose if push came to shove and you could show that she monitored entitlements you could try the same argument, but I do not hold out much hope of that method being acceptable.
I am so sorry to have to rain on your parade.
bigduckontax and other Tax Specialists are ready to help you
Customer: replied 2 years ago.

Hello Keith

Thank you for your answer, albeit disappointing, it is as I expected. During the time that I was working on these projects, my wife acted as typist, telephone message taker when I was out, cleaner of my office, provider of cups of tea etc.

Now that the projects are completed and the royalties starting to flow, apart from the possible tax advantages, I thought it would be nice to give her a share of the income.

Despite the disappointment I shall rate your answer at the highest level

Regards

Tony

Expert:  bigduckontax replied 2 years ago.

Tony

But as she was clearly acting and making a contribution to the business then you are in a far stronger position to claim that a proportion of your royalty income is attributable to her efforts in exactly the way rental income could be split. I submit that with this new information your position is strengthened.

Please be so kind as to rate me before you leave the Just Answer site.

Regards

Keith

Expert:  bigduckontax replied 2 years ago.
Thank you for your support.