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Dividends to directors wives

Dividends to directors wives

What is the tax registration process from 6.4.16 for directors wives or anybode else for that fact , that receive dividends in excess of £5000 .  Do they have to complete form SA1 and ask for a tax return or do they need to phone HMRC and advise them of their income.  The form SA1 doesnt seem to have been amended for the dividend allowance and I cannot find anything on HMRC website .

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By Ruddles
23rd Feb 2016 16:35

Jumping the gun

The legislation is not on place yet, so I would not expect public guidance (I use the term loosely) to be updated until it is.

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23rd Feb 2016 16:42

Amendment necessary?

Having untaxed income is already an option on the form. Surely dividends in excess of the £5,000 nil rate band will just be considered untaxed income for SA1 purposes.

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By Ruddles
23rd Feb 2016 16:45

I think, Stepurhan

That the issue is that the guidance on Gov.uk says still that you need to register for SA only if dividend income is chargeable at higher or additional rates.

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23rd Feb 2016 17:01

Nonsense

Ruddles wrote:

That the issue is that the guidance on Gov.uk says still that you need to register for SA only if dividend income is chargeable at higher or additional rates.

Nice to know that the Government doesn't really understand its own legislation.

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23rd Feb 2016 17:20

Guidence is current on this point?

lionofludesch wrote:

Ruddles wrote:

That the issue is that the guidance on Gov.uk says still that you need to register for SA only if dividend income is chargeable at higher or additional rates.

Nice to know that the Government doesn't really understand its own legislation.


Well at least in that respect (if not for a load of others on related matters) its guidance is currently aligned with current legislation.

Incidentally if you try to register an online SA1 before 06 April 2016 showing a commencement date after 05 April 2016 the computer says no. I know because I tried it as an experiment. Not that there is much point in registering until approaching the end of next tax year.

Anyway as regards untaxed income the SA1 asks you to register only if HMRC is incapable of collecting the tax through PAYE. In a lot of cases HMRC do regard themselves as so capable; witness the 2016-17 coding notices just now being issued.  So in some cases I guess that a phone call will suffice.  But if they only have £8K salary perhaps use a bit of common sense.

With kind regards

Clint Westwood

 

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23rd Feb 2016 16:53

Not sure

Why director's wives would receive dividends or am i missing something?

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23rd Feb 2016 17:00

Obvious, but I'll say it

JCresswellTax wrote:

Why director's wives would receive dividends or am i missing something?

Perhaps they have shares .......

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29th Feb 2016 16:55

This is why...

JCresswellTax wrote:

Why director's wives would receive dividends or am i missing something?

The wives are sleeping partners.

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29th Feb 2016 17:18

To be fair

Brugesbear wrote:

The wives are sleeping partners.

Their duties probably extend to a few domestic chores, as well as the basic nuptials.

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By Ruddles
23rd Feb 2016 17:20

My bad, Lion - sloppy wording on my part

There are of course other criteria - I was referring specifically to when a return may be required in respect of dividend income - at present  it isn't required if a taxpayer has such income  chargeable only at ordinary dividend rate (and no other reason to file a return).

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23rd Feb 2016 17:50

Me too

Ruddles wrote:

There are of course other criteria - I was referring specifically to when a return may be required in respect of dividend income - at present  it isn't required if a taxpayer has such income  chargeable only at ordinary dividend rate (and no other reason to file a return).

So was I, Ruddles.  But, I suppose a taxpayer can have it dealt with more informally through their coding.

Personally, I'd normally prefer to complete a SA return than have random figures come from HMRC, especially as I'm not sure how they can know how much dividend the taxpayer receives, but each to his own.

In fairness, is this "advice" referring to the pre-April 2016 régime ?  In which case. it's perfectly valid.

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23rd Feb 2016 17:41

Guidance

There are lies, damned lies, and government guidance. ;-)

As we all know, government guidance says that all directors have to register. As we all know, that is not correct. I guess the change in taxation of dividends is likely to mean a lot of owner/directors who have (legitimately) avoided registering so far will now have to do so.

So the problem is ill-advised wording on the part of the guidance. Under the rules as they stand, dividends will only attract tax in higher and additional rates. It would have been far better for it to say "will attract an additional tax liability" which would have covered future changes in legislation. After all, anyone that doesn't understand when dividends will attract an additional liability is unlikely to understand when they would attract tax at higher or additional rates either.

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By DMGbus
24th Feb 2016 08:51

Timescale - no action yet required

The timescale for notifying HMRC of a liability to income tax beyond that deducted at source is six months after the end of the tax year concerned.

Dividends tax to be introduced 6 April 2016 = tax year to 5 April 2017.

Add six months = 5 October 2017, so before 5 October 2017 use whatever the current version of the following short form is:

https://online.hmrc.gov.uk/shortforms/form/SA1

(hopefully will be updated sometime in 2016/17 to reflect the dividend tax - quite correctly as no such tax exists for 2015/16 no mention of the dividends tax currently).

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24th Feb 2016 09:12

Rush

Yes, I'm not going to rush into this but I expect to notify HMRC sometime towards the end of 2016 for shareholders who I know will be affected.

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By QBE
24th Feb 2016 15:09

Per Agent Update 52 ....

 

https://www.gov.uk/government/publications/income-tax-changes-to-dividen...

"The majority of non-taxpayers and basic rate taxpayers do not currently need to inform HM Revenue and Customs (HMRC) of their dividend income. From April 2016, individuals who receive dividends between £5,001 and £10,000, and who need to pay tax on those dividends at the basic rate, will have to inform HMRC of their dividend income for the first time. This number is estimated to be fewer than 8,500 customers. (Individuals with more than £10,000 of dividend income are already required to be in Self Assessment.)"

============

I didn't know about the £10,000 threshold - does anyone know where this came from?

 

 

 

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24th Feb 2016 16:13

really?

QBE wrote:

 

https://www.gov.uk/government/publications/income-tax-changes-to-dividen...

 From April 2016, individuals who receive dividends between £5,001 and £10,000, and who need to pay tax on those dividends at the basic rate, will have to inform HMRC of their dividend income for the first time. This number is estimated to be fewer than 8,500 customers. (Individuals with more than £10,000 of dividend income are already required to be in Self Assessment.)"

============

I snorted quite loudly at the thought of there only be 8,500 tax payers in the country with a small slug of dividends. I would suggest a good 30% of our Ltd Co. clients have a minor basic rate shareholder, a few of course will be under £5k and most over £10k, but quite a lot slip in the gap. There has got to be tens of thousands who go are in this range either every year or (say) one year in 3, quite how many will put their hand up is quite another matter. 

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By DMGbus
24th Feb 2016 15:16

£10,000 "rule"

The so called "£10,000 of dividends or higher" rule is some sort of HMRC internal working rule rather than a stautory obligation.   It has the same standing as "directors should register for self assessment".

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29th Feb 2016 14:03

Err

I know in some cases people believe that certain individuals don't need to register for self-assessment but wouldn't it be easier if they just did as a matter of course.

All my directors and minor shareholders are in self-assessment (easy fees for me). Its also a lot easier for people to get mortgages if they have an "official" income record at HMRC.

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29th Feb 2016 14:29

SA

petestar1969 wrote:

All my directors and minor shareholders are in self-assessment (easy fees for me).

Let's just assume that not all of us are as morally bankrupt and self-serving as your good self.

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29th Feb 2016 14:37

Agreed

Tim Vane]</p> <p>[quote=petestar1969 wrote:

All my directors and minor shareholders are in self-assessment (easy fees for me).

Let's just assume that not all of us are as morally bankrupt and self-serving as your good self.

[/quote

I keep taxpayers out of self-assessment for as long as possible if there's no tax liability involved and get as many as possible removed from self-assessment if they satisfy HMRC's unilateral (unlawful) criteria.

8,500? Who are they kidding? I'll be registering at least a dozen some time in 2017 when I've got time.

 

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01st Mar 2016 14:16

Yes

Tim Vane wrote:

petestar1969 wrote:

All my directors and minor shareholders are in self-assessment (easy fees for me).

Let's just assume that not all of us are as morally bankrupt and self-serving as your good self.

 

Lets also assume that I'm the only accountant running my business as a business, eh?

 

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01st Mar 2016 15:25

Short term view

petestar1969 wrote:
Lets also assume that I'm the only accountant running my business as a business, eh?
Doing unnecessary work and billing for it will net you more profits in the short term. Getting the reputation as the accountant that does unnecessary work and bills for it is likely to make it hard to get and retain clients in the future.
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02nd Mar 2016 19:35

Fleece

petestar1969 wrote:

Tim Vane wrote:

petestar1969 wrote:

All my directors and minor shareholders are in self-assessment (easy fees for me).

Let's just assume that not all of us are as morally bankrupt and self-serving as your good self.

Lets also assume that I'm the only accountant running my business as a business, eh?

Business or not, I value my client base and prefer not to fleece them.

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By gcg007
29th Feb 2016 14:05

Micro entity accounts

Shareholding is no longer required to be detailed in Micro-Entity accounts submitted to HMRC. If a SA1 is not completed by 'the director's wife/partner' and an SA return submitted for 2016/17 how will HMRC be able to determine that their dividend income has exceed the £5000 allowance?

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29th Feb 2016 14:30

Say what?

gcg007 wrote:

Shareholding is no longer required to be detailed in Micro-Entity accounts submitted to HMRC. If a SA1 is not completed by 'the director's wife/partner' and an SA return submitted for 2016/17 how will HMRC be able to determine that their dividend income has exceed the £5000 allowance?

Is the company required to file a tax return?

Does that tax return require a full set of statutory accounts?

Is there a record of shareholders anywhere?

If the answer to all of these is no, then you might have a point.

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29th Feb 2016 15:22

All

I'm pretty sure all mine will be on SA this time next year.

Not that I had many who weren't.

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29th Feb 2016 15:29

I thought that all directors' wives and directors' dogs had to complete tax returns, and that was the law?

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01st Mar 2016 15:50

What a let down

Portia Nina Levin wrote:

I thought that all directors' wives and directors' dogs had to complete tax returns, and that was the law?

Come on, Portia, now you're letting the side down. It's wives, dogs, budgies, hamsters and grandmothers. I know because I read all those words somewhere on HMRC's website.

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By gcg007
29th Feb 2016 17:32

You thought that all directors wives and dogs.........

Tell that to Harry Rednap's dog Rosie who received £125K fom the Pompey Chairman in her Swiss bank account.

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