Fairly simple question hopefully! With the £1000 trading allowance, is it possible to invoice a husband/wife/partner etc for ‘bookkeeping’ services for the year so that they receive further tax relief, without impacting your own position?
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What is "own position"?
I ask this question because HMRC guidance says
You can’t use the allowances in a tax year, if you have any trade or property income from:
a company you or someone connected to you owns or controls
a partnership where you or someone connected to you are partners
your employer or the employer of your spouse or civil partner
Read it 3 or 4 times and presumably meaning the person invoiced gets and extra £1k deduction for the bookkeeping cost but the 'bookkeeper' - who presumably has other income using their PA's already - has no additional liability because of the trading allowance they can claim.
And I suppose the answer is 'possibly', but you would want to be able to clearly show transfer of funds settling the invoice and the the work was carried out, not just a paper transaction solely to get an additional deduction.
EDIT: Or possibly not -
ITTOIA
783AP Exclusion from relief: payments by firm
No relief under this Chapter is given to an individual for a tax year if—
(a) the individual has relevant income for the tax year, and
(b) the income includes a payment made by, or on behalf of, a firm at a time when the individual is—
(i) ..., or
(ii) connected with a partner in the firm.
And indeed:
783 AO Exclusion from relief: payments by employer ; or
783AQ Exclusion from relief: payments by close company
Though I can't immediately see the definition of 'firm' that restricts that to a partnership but not a sole trader?
It doesn't matter what the definition of firm is, it's the definition of partner that's relevant.
The proprietor of a sole trade is not a partner, so the individual is not connected to a partner, regardless of how you define 'firm'.
Ah, hence my query... it hadn't occurred to me (until now) that anyone had read it that way.
To avoid confusion, perhaps we should stick to the term "bidie-in" for a domestic partner.
Have you actually been paid these amounts, or is it just a theoretical assessment of what you are worth.
Does this husband/wife/partner actually do any bookkeeping ?
I note 'bookkeeping' is in inverted commas. Will the inverted commas be entered on the h/w/p's tax return under "nature of trade or profession" ?
It's not always as straightforward as it might appear...https://www.accountancyage.com/2017/10/09/new-trading-allowance-simplici...