Can any help me out I am really stuck and I don't know how to approach this question if some here who are currently doing F6 or done it before can please break down this question for me .
Mr. Hughes has decided to set up his own housing consultancy business on 1 January 2016 preparing accounts to 31 March each year. His business plan shows profits in the region of £72,200 per year, before any payment to his wife, Sandy. He hopes that his new business will provide advice to other property owners thinking of renting out their properties and also management services for rented residential properties. In the longer term, he hopes to build up a portfolio of properties for rental.
His wife (Sandy) is 52 years old .Sandy has been employed as a bookkeeper since 2008, earning £2,000 per month (Monthly PAYE £233 deducted).She will cease her current employment on 31 December 2015 and will keep the books and prepare the accounts for Hughes’s business from 1 January 2016 .She will continue to work the same number of hours per week as she does in her current employment.
Mr. Hughes would like some advice on the taxation implications of involving his wife, Sandy, in his business either as an employee, or, alternatively, by taking her into partnership.
Evaluate the taxation implications for Mr. Hughes of:
(1) Hughes employing his wife Sandy, and
(2) Taking her into partnership
Support your answer with calculations of the income tax (IT) and National Insurance Contributions (NIC) payable, based on the expected trading results for a full year of operation and the tax rates and allowances for 2014/15.
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