It must by now be well known (well, by anyone who attends Tim Goode's seminars) that a wife who is not active in the business (et al) and thus a 'sleeping' partner is exempt Class 4 NIC (still fresh news to PTP Tax Return software it would appear!!).
So my question is: If the partnership makes a trading loss, and this loss is shared (say, 50/50) with the 'sleeping' partner, and if aforementioned partner has a separate source of earned income from n entirely separate employer (in this case she is a HMRC officer), can that spouse (on completion of a SA100 + partnership return, obviously) offset that loss against ' Sched E income?).
usually, yes of course. But would the 'sleeping partner' bit impact/modify in any way?
Replies (3)
Please login or register to join the discussion.
sleeping partner & class 4 nic
I think you have to be careful with the sleeping partner status for class 4 nic exemption - when I claimed and failed on this (inspired by a lecture) the point boiled down to:
had the wife (in this case) contributed significant capital (in this case arguably not) and had the partnership agreement been amended to reflect the change in status from active to inactive?
without these points being fully resolved there was a danger that the settlements legislation could still bite
http://www.hmrc.gov.uk/manuals/tsemmanual/TSEM4215.htm example 10
thanks Anna
if you're not caught by the sideways loss anti-avoidance rules then I would have thought you were of - but I can't remember the detail but I seem to remember 10 hours a week and a capital contribution of £25k seems to be important