I'm self employed as a consultant and am in an IVA. A friend (who is aware of the IVA and has been in one himself previously) has offered me some work that would pay considerably more than I currently get. He has offered to pay part of it directly to my wife or anyone else I nominate. It's very tempting. Thoughts please? the other alternative would be to declare the whole amount and let it be dealt with under the 10/50/50 rule which wouldn't be that bad, but as it would ultimately increase my IVA payments it would also scupper my chances of being able to save up enough to be able to make a F&F settlement offer.
The 10% 50/50 rule does not apply to the self employed. Your case is reviewed annually and any extra earnings would lead to future payments increasing by 50% of the extra money after allowing for increases in the cost of living. Your accountant should be able to advise you on minimising any tax due and perhaps they should be your next port of call.
Thanks for that. It does seem more than a little dodgy although I appreciate my friend's sentiment. Does that mean that until my annual review I would keep all the extra money without having to keep some back to put into the IVA? Also, would any future F&F offer be based on the monthly payment being made at the time or on the original amount of the IVA?
You keep whatever earnings you make during the year as this can fluctuate from month to month and indeed some months you could earn nothing. There is no sickness or unemployment assistance while self employed so you need to make allowance for this and any future tax. If your wife does not work or is not using all her allowances you could pay her from your business for any work she does. Again your accountant should be able to advise on this.
Any full and final is usually based on what your current surplus is whether higher or lower than at the start so if worked slacked off in the future a full and final would be based on what the earnings are at this time and not what they were when you earned the most.
