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Can I employ my wife to use her tax allowance?
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# 1
mctone
Old 01-01-2007, 4:52 PM
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Default Can I employ my wife to use her tax allowance?

I work for a company but on a self employed basis. I earn on average £420 per week before expenses (petrol etc)

My wife does not work but does sometimes help me with my paperwork. Can I employ her and take advantage of her income tax allowance?
Would I just add this weekly payment to my expenses and register her self employed too?
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# 2
Raksha
Old 01-01-2007, 5:59 PM
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If you employ her, you may be asked to show that she's doing an appropriate amount of work for the renumeration, according to our accountant anyway....
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# 3
margaretclare
Old 01-01-2007, 6:32 PM
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No, if you were employing her, she wouldn't be self-employed would she - she'd be one of your employees. Her personal tax allowance is hers, not yours.

To claim a tax allowance you (or she) would have to have earned income to set it against. And she'd also be liable to pay NI.

Margaret
Ær ic wisdom funde, ær wearð ic eald.
Before I found wisdom, I became old.
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# 4
Hoddie
Old 01-01-2007, 7:33 PM
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Quote:
I work for a company but on a self employed basis.
Not strictly possible.

Quote:
Can I employ her and take advantage of her income tax allowance?
You could pay her £5,035 for 06/07 (plus an extra £2,150 if you want to use her 10% band) but you'd have to register as an employer (for PAYE/NIC purposes) and be able to prove your wife does work for you should the need arise.
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# 5
linlin
Old 02-01-2007, 5:43 AM
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Quote:
Originally Posted by mctone
I work for a company but on a self employed basis. I earn on average £420 per week before expenses (petrol etc)

My wife does not work but does sometimes help me with my paperwork. Can I employ her and take advantage of her income tax allowance?
Would I just add this weekly payment to my expenses and register her self employed too?
Let's ignore the iffy-sounding self-employment.

If your wife helps in any capacity whatsoever, you can pay her. She won't be self-employed and provided she's earning under the NI limit, she won't need to declare the earnings. Add it to your expenses on your records.
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# 6
mrsS
Old 02-01-2007, 8:25 AM
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we often put "wifes wages" through a self employed persons books based on a reasonable amount for doing paperwork and telephone calls etc. This is then shown as casual earnings on her own SA tax return.

Obviously this has to be reasonable for the amount of time involved. You cant pay her £100 per hour to answer the phone!

but if you are only paying her a few hundred pounds a month then this is normally ok AS LONG AS YOU HAVE RECORDS TO BACK IT UP.

going back to your op-you cannot work for a company and be self employed-if you are contracting/working for one company then you are an employee and what you want to do with wifes allowances is irrelevant.
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# 7
Cook_County
Old 02-01-2007, 9:47 AM
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But you are missing a trick here.

The best plan (although I can't recollect the numbers right now) is to pay your wife as an employee (ie set up a PAYE scheme) an amount greater than the lower earnings limit for NI but below the level of he prsonal allowance.

Assuming she has no other income she pays no tax but qualifies for the State Second Pension (S2P) which will give her significantly greater amounts of stat retirement pension but at no cost.

You would have to write an employment contract, and actually pay her. The work would however have to be at a justifiable rate.
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# 8
mctone
Old 04-01-2007, 10:32 AM
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Thanks

I am self employed but classed as an agent for a company woking on self employed basis.

What I meant was to register her self employed and pay her an hourly rate to do my computer/paperwork etc.

I would be looking at paying enough so as to not pay tax on what I pay her as it would be my expenses and also enough to be below her tax band so she doesn't pay tax. The household income would then be the same except for the tax bill being a little less at the end of the year.

As you have to register self employed no later than 3 months can I only back date her payments 3 months or go back to April as she has been doing it since then?
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# 9
vics 1982
Old 07-01-2007, 9:32 AM
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My partner is self employed and when he was with his ex 3 years ago he was allowed 1900 a year in expenses for her doing his bank and paperwork. He just added it into the year end statement as an expense along with light/heat etc costs, perhaps thats what you could do....
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# 10
Hoddie
Old 07-01-2007, 2:07 PM
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Quote:
As you have to register self employed no later than 3 months can I only back date her payments 3 months or go back to April as she has been doing it since then?
This suggests that your wife would also be self-employed - which would not be the case. For this to work she would need to be your employee, and you'd need to register as an employer.
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