Hoping you can help me!

[Skippy]

I have a question that's nothing to do with an IVA but I know that there are so many people with so much knowledge on here that I'm hoping someone might be able to help me!

The mortgage and all our bills are in Dave's name (for obvious reasons!) and I pay him a set amount each month towards this. Up until now I have been paying him in cash, but my company has moved offices and I'm no longer in a town, so it's not as convenient to get the money any more. I suggested that I set up a standing order each month to pay the money directly into Dave's account, but as he's self employed he's worried that HMRC might want to know where the money has come from, and class it as unearned income. Does anyone know if it would be ok for me to pay him like this? He does his own books (he's much cleverer than me!) and doesn't have an accountant to ask.

Yesterday is history, tomorrow is a mystery, today is the present - a gift to make the most of.

View my blog at http://skippy13.blogs.iva.co.uk/

[Martin2011]

Hey Skippy... sorry, don't know the answer, although instinctively I'd assume that HMRC would accept the deposits as 'contributions to household costs from a partner' without questioning them further. It can't be that unnusual?!? Hope someonecomes along shortly with a more definitive answer....and Happy New Year...

Martin

[MelanieGiles]

Depending upon how much you pay Dave, he is allowed to "rent a room" for up to £4,250 completely tax free. That covers the rent and then any contributions to bills would fall outside that as well.

Just be careful that HMRC might come round to check that he is renting you a room, and that you are not sharing one. (Of course I am only jokin Skip!!!_

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

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[Skippy]

Well he has threatened to make me sleep in the shed a few times so I won't give him any ideas!

Yesterday is history, tomorrow is a mystery, today is the present - a gift to make the most of.

View my blog at http://skippy13.blogs.iva.co.uk/

[ray_a]

Hi Skippy

I don't think this will be a big a problem as you think!

The Revenue do understand co habiting and would expect to see an amount coming into Dave's account for contribution to house keeping. I would strongly suggest that you mention it to Dave's accountant and this is shown as a private transaction between yourselves so that it won't be included. After all your income has been treated for tax purposes and given the notion that income should not be taxed twice I think that would be fair!

I hope this helps!

[Skippy]

Thanks Ray. Dave doesn't have an accountant as he does his books himself but I can see what you mean about taxing the money twice - I wouldn't put it past this government though!

I did say to him that I didn't think it would be a problem as the money would be paid from my bank account which is registered at the same address and if necessary I would confirm in writing what the money was for.

Yesterday is history, tomorrow is a mystery, today is the present - a gift to make the most of.

View my blog at http://skippy13.blogs.iva.co.uk/

[ray_a]

Personally, to be fair to the Inland Rev they never attack this front because they can check your position from looking at your tax record from the PAYE system.

Not a bad idea though to keep it seperate from the business records though!

[cr15py]

I do work in accounts, and this is a fairly regular occurance. It would not be taxable income in my opinion, if HMRC were so inclined to treat it as taxable income, I dare say the interest on the mortgage, council tax, light and heat, water rates, etc, etc would more than cover the rent he received anyway.

I wouldn't worry about it.

[nic_23]

I still live at home and pay bed and board costs to my parents of £350.00 per month. This is set up to come out of my account at the beginning of each month as a standing order. My mum only works very few hours a week and doesnt earn a great deal and pays nearly nothing in tax, she has never declared this but the fact that it can be proved I live at home easily shows its my contribution to the running of things!
I think its good money management, and when it comes to my review it clearly shows where my money is going. If I was drawing it out in cash I could be doing anything with it!
Nic x