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I take dance lessons with one other person: we share the teacher's time 50:50 and pay half the cost each. Currently, my partner pays this money into my bank account and then I pay the teacher. However, I worry that the tax authority will see this as income for me & demand income tax on it, even though I see it as simply channelling their money to their expense, and not actually income for me.

Of course, I could come to an arrangement where we pay the teacher 50:50 and the money never goes through my account, but the teacher doesn't like this.

Is there another way? For example, is there some specific way to declare split-bills on a tax form and avoid it being called income?

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    how much are you paying that you think this is going to be noticed by people dealing with millions?
    – Aequitas
    Sep 14, 2022 at 6:59
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    Just because it comes into your bank account, doesn't mean it was income for tax purposes. There are lots of reasons for people to move money around from their own accounts, or receive money non-taxable (tax rebates, in this case a split bill, etc).
    – stanri
    Sep 14, 2022 at 8:02
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    This is commonplace in the UK. You really have nothing to worry about... HMRC also doesn't just routinely peer into random people's bank accounts
    – ScottishTapWater
    Sep 15, 2022 at 13:44

2 Answers 2

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There's no need to do anything. You don't need to declare it on any tax form, and if you are ever audited by the tax authority (HMRC), just explain what happened. Repayment of a debt/sharing an expense like this is not income.

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    I would note that some online payment providers take the liberty of doing (wrong) tax reporting of their own, although the cases I've heard of this causing problems for people are using Paypal in the US with the automatic form 1099. Direct bank transfer in the UK seems safe.
    – pjc50
    Sep 13, 2022 at 10:08
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    @pjc50 That would be a serious breach of GDPR if they did ....
    – deep64blue
    Sep 13, 2022 at 10:46
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    +1 - anecdotally I did this for years with rent, where I paid the letting agent and my housemates paid me. It never occurred to me to think about tax issues and was never a problem (I was however solely responsible for paying the full rent which in retrospect may have not been very smart).
    – Carl
    Sep 13, 2022 at 11:32
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    So I went and checked for the UK: it seems HMRC do have access to papal. Guardian theguardian.com/small-business-network/2017/jan/27/… and I think this bit of legislation; legislation.gov.uk/ukpga/2016/24/section/176/enacted
    – pjc50
    Sep 13, 2022 at 20:11
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    @PaulD.Waite Good point. My original co-tenants had long gone and been replaced by new ones. I don't remember if the first batch gave formal notice to the agent that they were leaving so maybe they were still liable. In retrospect it was a bit of a mess but no harm came of it and there were no tax implications.
    – Carl
    Sep 14, 2022 at 13:09
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It sounds like you are repeatedly paying, for each lesson taken. In that case, you could take turns paying the bill, so that you pay one bill in full and your partner pays the next bill in full.

This way the teacher gets a single payment each time, and no money is channeled.

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  • Probably still more work for the teacher to track payments coming from two different bank account numbers.
    – bdsl
    Sep 14, 2022 at 11:23
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    @bdsl Where I live you cannot see which account a payment is coming from, I've never heard of that so couldn't imagine it being an issue. I see the UK tag now though, and I don't know how it works there.
    – user985366
    Sep 14, 2022 at 15:10
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    You can see the payer's account name when you receive a bank transfer here.
    – bdsl
    Sep 14, 2022 at 15:58

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