I am reaching out to seek guidance on a tax-related matter, related to the recent relocation of my spouse and me to the UK. We are new residents, having lived here for over 183 days in the previous year.
Before moving to the UK, my spouse operated a Sole Proprietorship in Hong Kong. The business made a profit of approximately £50,000 last year. Of this profit, approximately £30,000 was transferred to my personal account in Hong Kong as I worked as a contractor for my spouse's business.
Since the Hong Kong tax system does not allow a deduction for a spouse's expenses, we didn't factor my contributions into our business tax return there. Additionally, as I understand that my spouse can use my tax allowance here in the UK, I didn't include my earnings from the business on my Hong Kong tax form; we simply submitted the profit tax.
Given this situation, we would appreciate your guidance on how to declare our income. The options we are considering are as follows:
A) Should we declare my wife's income as £20,000 and my income as £30,000? This allocation would be substantiated by my service quotation and invoice.
B) Should we declare my wife's income as £50,000 and my income as £0?
Furthermore, if we choose option B, would I need to declare the transfer of £30,000 to my personal account? If so, how should I go about doing so?
We look forward to your advice on the most appropriate course of action to comply with UK tax regulations.
Thank you for your time and assistance.