I work full time leaving my wife (business partner) working in our shop and post office. The earnings from the post office are paid gross to me as the postmaster with a monthly payslip.
Can I include the post office earnings as a business income rather than a personal payment even though I have a p60 in my name? This would mean that my wife could use her full tax allowance.
This is a question for your accountant - we can tell you how to represent things in QuickFile but we can’t advise you on what you are and aren’t legally allowed to do. The answer will depend exactly what legal structure the business is running under and what the relationship is between you (personally) and the Post Office company that is paying you - are you a sole trader, is it a proper partnership with you and your wife as partners, or are you an employee of the Post Office company being paid through PAYE.
Thank you for your reply.
It is a proper partnership with me and my wife as partners. I am paid by the post office with a payslip but they do not take out tax or NI payments.
If its a proper partnership. And I mean you file partnership tax returns. Not just partnership in name only. Then all income from the business is income for the partnership.
But what worries me is when you say, use my wife’s personal allowance. If it’s a real partnership Then all profits are split equally on each of your partnership pages on your self assessments. So I’m at a loss as to why the question has been asked, unless your either not a real partnership, or you don’t understand how to complete partnership tax returns. I suggest you get an accountant.
The profits don’t necessarily have to be split equally - unless you have a written partnership agreement that stipulates a particular split then you can divide up between the partners however you see fit each year.
Yes you are correct the profits can be split however each partner sees fit. But as a general rule a partnership will split profit 50/50. If a partnership intends to split profits differently each year its advisable to set up an LLP instead.
The reason for this is it reduces any liability to those of the partners whereas a self employed partnership will take full responsibility for everything regardless of the split of profit.
That is incorrect. If you wish to share profits any way other than equally, then you need a written partnership agreement. In the absence of such an agreement, the Partnership Act 1890 comes into play which stipulates that each partner is entitled to an equal share of the profits.
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