Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • dave8989
    • By dave8989 11th Oct 17, 8:23 PM
    • 39Posts
    • 1Thanks
    dave8989
    Employee questions, Payroll advice
    • #1
    • 11th Oct 17, 8:23 PM
    Employee questions, Payroll advice 11th Oct 17 at 8:23 PM
    Hello,

    I'm a sole trader who is looking to employ a family member to be my book keeper. They are above state retirement age and the annual pay would be worth £4-5,000. The family member's only other personal income is a pension of approx £200 per month and they share approx £1,200 of their personal allowance with their spouse.

    Am I correct that this means that employee pension contributions, NI contributions and PAYE are not required to be deducted when paying the family member? Also as the employer, pensions contributions would not be required from me?

    Setting up and running the payroll - I would like to do this myself if possible. Is anyone able to offer advice on this?

    Thanks
    Dave
Page 1
    • runninglea
    • By runninglea 11th Oct 17, 8:34 PM
    • 790 Posts
    • 1,145 Thanks
    runninglea
    • #2
    • 11th Oct 17, 8:34 PM
    • #2
    • 11th Oct 17, 8:34 PM
    People above retirement age still have to pay tax.
    You say they only get £200 per month, do they get a state pension?

    Added to your 5K per annum what is their total income? They still get £11,000 free pay allowance. Tax at 0%
    Year 2017 (11,900/£17000mortgage repayment)Overall mortgage (51,0000/165568) (30
    .8%) (30/100) payments made. Total paid 2017 year £11,900

    Total paid 2017 year £11,900
    • xylophone
    • By xylophone 11th Oct 17, 11:23 PM
    • 23,646 Posts
    • 13,777 Thanks
    xylophone
    • #3
    • 11th Oct 17, 11:23 PM
    • #3
    • 11th Oct 17, 11:23 PM
    If the family member is over SPA then no NI will be payable on the salary.

    https://www.gov.uk/workplace-pensions/joining-a-workplace-pension

    Auto enrolment would not apply.

    The family member has a state pension and a personal pension?

    Marriage Allowance applies? https://www.gov.uk/marriage-allowance

    Taking a salary of £4000-£5000 might mean that she has some tax to pay, depending on the amount of her other income.

    HMRC should supply a tax code.
    Last edited by xylophone; 11-10-2017 at 11:26 PM.
    • dave8989
    • By dave8989 19th Oct 17, 1:20 PM
    • 39 Posts
    • 1 Thanks
    dave8989
    • #4
    • 19th Oct 17, 1:20 PM
    • #4
    • 19th Oct 17, 1:20 PM
    People above retirement age still have to pay tax.
    You say they only get £200 per month, do they get a state pension?

    Added to your 5K per annum what is their total income? They still get £11,000 free pay allowance. Tax at 0%
    Originally posted by runninglea

    Hi, they get £74.86 a week state pension, I was wrong it's more approx £300 a month. No other income. They share £1050 of personal allowance with their spouse. This leaves approx £ 6350 personal allowance a year.

    I'm thinking if they were set up as self employed and I hired them Paying them around £4-5000 a year then NI Class 2 doesn't apply as they are above state retirement age and NI Class 4/Tax @ 20% wouldn't apply as they would not be earning enough to be have to contribute? Please correct me if I am wrong? This option seems easier than Payroll other than the inevitable self employed tax return they will have to do.

    Thanks,
    Dave
    • 00ec25
    • By 00ec25 19th Oct 17, 2:20 PM
    • 5,559 Posts
    • 4,955 Thanks
    00ec25
    • #5
    • 19th Oct 17, 2:20 PM
    • #5
    • 19th Oct 17, 2:20 PM
    I'm thinking if they were set up as self employed and I hired them Paying them around £4-5000 a year then NI Class 2 doesn't apply as they are above state retirement age and NI Class 4/Tax @ 20% wouldn't apply as they would not be earning enough to be have to contribute? Please correct me if I am wrong? This option seems easier than Payroll other than the inevitable self employed tax return they will have to do.

    Thanks,
    Dave
    Originally posted by dave8989
    you cannot do that, they would never pass the tests to be genuinely accepted as self employed. They would undoubtedly be classified as your employee

    as an employee who is over state retirement age neither they (as employee) nor you (as employer) would have to pay NI

    with a gross pay from you of 4-5k, given your other statements about their pension earnings, then yes, provided they notified HMRC of their position so their tax code is dealt with effectively, you would not have to deduct any income tax from the money you pay them

    you would nonetheless have to register with HMRC as an employer and submit payroll returns each month
    Last edited by 00ec25; 19-10-2017 at 2:33 PM.
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

5,130Posts Today

6,683Users online

Martin's Twitter