Tax implications...

[WiddlinDiddlin]

Baffled...

If persons A, B and C wrote a book, and the book is sold online, the profits from the book go to person A, because you can only have them sent to one person...

Person A then keeps their 3rd, and sends the other 2/3rds to person B who then keeps their bit and sends the last 3rd to person C (there are reasons it happens like this)...

Is person A liable for all of the tax on the whole amount?

Persons B and C are declaring their share and paying tax on that if it pushes them over the tax threshold.

All are self employed one is also retired, no ones on any means tested benefits.

Let’s say it’s £30k income.

Person has £30k income but £20k expenses, so only taxed on £10k but if this is their only income then there will be no tax to pay as it’s less than the personal allowance. They will need to keep accounts of course.

Person B has £20k income but £10k expenses, so only taxed on £10k but if this is their only income then there will be no tax to pay as it’s less than the personal allowance. They will need to keep accounts of course.

Person C has £10k income and this is all taxable, but if this is their only income then there will be no tax to pay as it’s less than the personal allowance. They will need to keep accounts of course (they too might have allowable expenses such as research books purchased).

The retired person will have a pension which is taxable income too - so they will need to account for this when paying their tax.

E.g. if they only have the basic state pension of £9,600 and earn £2.970 or less from the book and have no other income then they will still have no tax to pay as it adds up to no more than the personal allowance of £12,570.

It’s no different to any business who pays another business who pays a contractor, who pays another sub-contractor, who pays their assistant etc.

Ok.. thanks, I think I get it... so A would declare 30K, but then 20K of that is expenses (rather than only declaring 10K as profit and saying nothing about the other 20K but having a paper trail showing where it went if anyone ever asked)...

Is A just "collecting" the money, rather than being entitled to it all?
If so then 1/3rd of income each.
A is simply acying as an agent (as is B down the line) rather than incurring £20k of expenses.

Is there any contractual agreement?

Unless there is some sub-contracting or employment going in, the onward payments aren't 'expenses' for tax purposes - it's just passing on cash. They all have £10k income to declare, and be taxed on accordingly. The money is just being passed on by A, not earned by them.

Why on earth does A pass £20k on to B rather than passing £10k each to B&C?

Agree with this. The poster talking about the money being passed on being a deductible expense is wrong.

It’s about rights to the income. So if they are all entitled to a third it doesn’t matter who receives it, they will all get taxed on 1/3. No reducing income and expenses like the first example.

This

Just an FYI, if this is your only source of self employment income and your actual expenses are minimal you can claim a £1,000 trading allowance against your share of the income. That’s £1,000 per person not split across the 3 of you.

Sorry forgot about this and must have missed it!

No idea why A sends to B to send to me, something A preferred and it didn't seem worth bothering as she was sending it to the paypal account associated with the thing we all do and B sends me payments monthly from that for the other aspect of the thing we do anyway. Possibly to do with the long length of wet string that passes for the internet where A lives (less likely to expire during one transaction!).

Keeps her happy and is a matter of a couple of clicks for B to do.

I get two lots of dosh (thing 1, thing 2) and a statement of incomings/outgoings relevant to both things, each month so I am happy.

It isn't my only source of income, however I suspect it may be for one of the others, I'll mention that, thanks!