First tax declaration - Q2, unearned income

[Rob G]

Hi again,

OK, this is the second question. And hopefully the last one.

Our main purpose in coming to France was to support church and missions work (effectively we are here as missionaries but I had to set up a business to be able to support us). There are a few people in both the UK and France who have chosen to help us out financially by giving us financial support from time to time. I've read through the entire notes to the 2042 form and the 2047 (overseas income), and still have no clue as to what category we should report this support money under. A few months back I contacted the tax authorities directly (e-mail to their advice centre) but got a very inconclusive response. The basic problem is that they don't seem to understand that people might just want to give you money to help you live somewhere, simply because they believe in what you are doing. As soon as I talked about receiving money from someone, they automatically assumed this was "income" and we were being paid for providing some kind of service.

This is really a form of unearned income. Some of it last year was from people in France, so needs to be declared somewhere under French income, and some was paid into a UK bank account by people in the UK so presumably needs to be declared somewhere within overseas income and then carried across to a specific place on the 2042.

Does anyone have any clue where is the right place to report these things? If not then I think I'm going to have to try to find a helpful accountant....

Yours hopefully,

Rob

[Ron Avery]

I have changed my original reply as at the time I did not realise that you were a micro business

Quick answer is that any money you receive is income and if you were not a business I would agree that it is unearned as it is not a payment for services, a pension or salary.  However as a business you should declare all your worldwide income including the money paid into a UK account.

[Sunday Driver]

Let's think about this logically.  I want to give you money in order that you can live in France and carry out the missionary/charitable work that I support.  The consideration for my giving you the money is that you do the work.  So you are performing a "paid" service in that respect.   

As in the UK, there are French tax breaks for givers to organisations who look after people in difficulties, so you might want to explore this avenue or even look at some form of charitable status.  A good accountant will be able to advise you of the options.

 

[Rob G]

Thank you, both Ron and SD.

Let it be said (just in case it appeared otherwise!) that I am not seeking to avoid paying taxes where they are due. However, it seems to me that treating this form of income in the same way as income from my business cannot be right. I can't include it with my "revenus professionnels non commerciaux", because it simply isn't business income. I know it needs to be declared somewhere so that it can be appropriately taxed - I just can't find where!

Rob

[Rob G]

Just thinking about this further. Imagine the following situation: you're going through a difficult time financially (maybe you've lost your job), and some well-off friends offer to give you a small amount each month for a few months just to help you out. They expect nothing in return - they just do it because they're friends and they want to do what they can to help. Where would you declare this "income", and what charges would you have to pay on it (tax, social security contributions etc.)?

This is the closest example I can think of to our situation.

Rob