tax return for b shareholder?

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J

jandug

Free Member
Nov 24, 2010
8
1
  • #1
    Hi can someone put me straight regarding conflicting advice I have received regarding a tax return.


    My partner works for my business on a basic salary of £7,800 PA, this tax year she has so far received £27,000 in dividends as a B shareholder in the company.

    According to our accountant he states that because of the tax credit on dividends she ins't liable to pay an further tax on this dividend income. This I understand.

    He also states that there is no need for her to file a tax return in January (she has no other income than stated above) because she is on PAYE with the company.


    A close friend of mine who is also an accountant has told me that really, she SHOULD be filling a tax return.

    Who is giving me the correct advice?
     
    T

    teddys

  • #2
    Generally you need to file your SA tax return either because:

    a) HMRC issues a notice to deliver a tax return or

    b) you're obliged to notify HMRC of chargeability.

    Assuming you've received no notice from HMRC we need to analyse your obligation to notify.

    You don't need to notify if a) you have no chargeable gains, b) you're not liable to the high income child benefit charge (2012-13 onwards) and your dividend income (the only source other than salary) from UK resident companies are within the basic rate threshold.

    So looks like your accountant was correct!
     
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    D

    De Paralle Union

  • #5
    Hi
    Sorry to add the confusion to this discussion, but I think you do need to submit the Tax Return (for your particular case). Below is the notice from the HMRC website...
    Who needs to complete a tax return?

    You have income from savings, investment or property

    If you are an employee or a pensioner and already pay tax through a PAYE code, you can sometimes ask for tax that you owe on income, such as savings and property, to be collected through your code number. You'll need to complete a tax return instead if the income you receive is:

    • £10,000 or more from taxed savings and investments
    Dividends is the form of investment income.
    Best way to find out is to call them with this quote and confirm application of this note. To be on the safe side I would submitted the return.

    Regards
     
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    M

    marlint

    Free Member
    Jul 24, 2009
    61
    7
    London
  • #6
    De Paralle Union said:
    Hi
    Sorry to add the confusion to this discussion, but I think you do need to submit the Tax Return (for your particular case). Below is the notice from the HMRC website...
    Who needs to complete a tax return?

    You have income from savings, investment or property

    If you are an employee or a pensioner and already pay tax through a PAYE code, you can sometimes ask for tax that you owe on income, such as savings and property, to be collected through your code number. You'll need to complete a tax return instead if the income you receive is:

    • £10,000 or more from taxed savings and investments
    Dividends is the form of investment income.
    Best way to find out is to call them with this quote and confirm application of this note. To be on the safe side I would submitted the return.

    Regards
    Click to expand...

    But although the partner is on PAYE- she does not pay tax through a PAYE code- as her income is below the tax threshold.
     
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    D

    De Paralle Union

  • #8
    Hi

    The Dividends are considered to be taxed at sourse (10% tax credit-therefore taxed) However note states that Return is required regardless of that deduction been made through PAYE or not if the investments/interest income exceeded 10,000. if submitted Return will be processed with the 0 Tax due. Better to call to HMRC and confirm with them, but do quote their annotation.

    Hope this helps
     
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    D

    David Griffiths

    Free Member
    • Jun 21, 2008
    11,553
    3,669
    Cwmbran
  • #9
    The HMRC site is categorically wrong when it says that directors need to complete a tax return, or anybody with savings income over £10,000 needs to complete a return.

    At one time it was HMRC's practice to issue a return to all company directors, as they are quite entitled to do. Once a return is issued, it must be completed. However, they have not pursued that practice for a few years now and most new company directors are not sent a self assessment return.

    The law, in the Taxes Management Act, sets out the circumstances in which people must notify HMRC that they are liable to self assessment. There is nothing in that Act, nor any other, that says that such notification must be given by a company director simply because they are a company director. Of course if they meet any of the other criteria, then they must notify HMRC.

    This topic crops up regularly and there are even accountants who don't know the law.
     
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