Navigating Overseas Income and Tax Considerations for Sole Proprietorships

Q1: As we moved to the UK on 18th June 2022, we have been earning overseas income from a sole proprietorship in Hong Kong which is in my wife's name. Part of this income was received prior to our move to the UK. In this case, should I consider the profit (income - expense) earned before this period and then deduct it from the total? Q2: If the total profit of the company is reflected in my wife's company tax bill, but Hong Kong laws prevent me from deducting my share of the income as a company expense, what else should I be doing apart from invoicing and showing the cash flow in my account?

Hi Ravi khan,
If the income is in your wife's name, it is only her that should be reporting the income.
For you to declare, it would need to be a partnership or she would need to pay you wages.
Thank you. 

Thank you, HMRC In my situation, my wife employs me, and I have control over the company. However, in Hong Kong, we cannot deduct spouse's earnings from the company as a business expense because it automatically utilizes my tax allowance. In my wife's case, should she declare her (total earnings minus my income from this company) for UK tax purposes? Then, I declare my income separately? *Please note that the money is transferred to my personal account.

Hi
Your wife should declare (in her Self Assessment tax return) all overseas self-employed income earned since her arrival in the UK on 18 June 2022. She can claim the wages paid to you since 18 June as an allowable expense.
Expenses if you're self-employed
You should declare wages received  (since your arrival in the UK) in your own Self Assessment tax return.
Thankyou.

Cheers, HMRC! It's all as clear as a bell now, sorted out all my worries about getting the declaration right.