Working for Hubby!

maegaz

I have this questions in my mind since April. My Hubby is a self-employed painter/decorator and I am a housewife doing a little bit of AVON here and there working about 2hrs a week. I don't really work for him as such as I just want to help him and he don't pay me as such obviously ....but what I do is a Secretarial job for him, I do his invoices, keep his records, run in the bank and etc. If he would declare me as his employee with a wage of less than £5000 pa, the following questions will be.....

1. Can he claim tax for my wage?
2. Can I be taxed for this wage?
3. Will we need proofs that he is paying me and I am getting paid?
4. Will it affect our Benifits?

I hope someone can answer my questions coz' I am a confused wifey.....

Thanks in advance.

PaulLuke

Ok, Some initial comments for you.

Starting point is that your husband is as free to employ you to provide secretarial duties as he is free to employ anyone else (think about all the MP's employing relatives !!)

1) If you mean can he deduct any wages he pays you from his before tax profits then yes.
2). Any money he pays you would be taxed in the normal way against you. i.e. You would be given a tax code and pay tax on any money in excess of you 0% allowance. Incidentally you would also end up paying NI on any money that you earn (subject to various earnings limits). As as employer I think your husband would potentially have a NI liability as well.
3). I suspect your husband would need to keep the same type of records as any employer would keep.
4) Depends on what benefits you receive - if they are income related then probably yes.

maegaz

Paul, thanks for the reply, much appreciated. What I meant was what if he pays me under my Personal Allowance (no clue how much), do I still need to pay and will he still have the liability? Just thinking of a way to cut his tax really. I am not sure if Child Tax Credit is income related

ceeforcat

I think there are other things to consider – when the primary objective is to save tax these can be overlooked.

If your husband pays you above £4680 per annum you must set up a PAYE scheme with the HMRC. No tax and NIC will be payable until you reach an amount of £5435 per annum, when employers and employees NIC kick in. Tax will commence on earnings above £6035.

Now you may well ask why you need to set up a scheme where there is no liability. That is because you would get NIC credits for earnings between £4680 per annum £90 per week) and £5435 per annum (£105 per week). A simple record needs to be kept and retained and a PAYE return completed at the end of the year even though there are no deductions to be made. Why bother? Simply, this means that this year will count towards your state pension entitlement and will have a positive affect on benefits you may claim in the future (Maternity Pay, Job seekers etc). It is well worth considering.

The effect on your income for tax credits is zero. (Your husband’s profits will be reduced by the amount your income goes up)

sweetietot

When calculating if you are liable to pay any tax, you would also have to count any income from Avon.

maegaz

Hello everyone!

Sorry just read all the replies and thank you very much for the inputs, very much appreciated. I think I get it now, anyway I am going to try the free self-assesment course from HMRC and see how it goes, and maybe I will just let my hubby's accountant sort this out at the moment.
Once again thank you!

fluffymuffy

Just call yourself a self-employed secretary and send him invoices for your work. Then fill in a tax return yourself. You might even get other secretarial work on this basis.

alm721

fluffymuffy wrote: »

Just call yourself a self-employed secretary and send him invoices for your work. Then fill in a tax return yourself. You might even get other secretarial work on this basis.

What are the implications/benefits of doing this rather then being paid a small wage? Also been wondering the same thing.

McKneff

when i did this for my husband (a self employed sole trader, painter & decorator) i just let the accountant deal with it.
I'm thinking you probably dont do more than an hour or so a week so none of the above would apply. Just let the accountnat deal with it when he does your books at the end of the year.

In the accounts which he submitted to the HMRC there was just an entry (by the accountant) for secretarial services.

Pennywise

Just remember that your hubbie actually has to pay you the wages, i.e. a separate transfer of money from his business to you that is separately identifiable as your wage in his accounting records. There is established case law that disallows what purports to be a wage paid to a wife where the money wasn't actually paid but was simply transferred from drawings when the accounts were drawn up.

Also the amount payable must be a realistic amount calculated as being a realistic open market hourly rate for the actual hours you work. So if you only work an hour or two per week, your wage will realistically be limited to say £10-£20 per week.

fluffymuffy

alm721 wrote: »

What are the implications/benefits of doing this rather then being paid a small wage? Also been wondering the same thing.

We do this - I'm simply an expense on my husbands business. An invoice to be paid by cheque. There's no employer's NI to pay and it's so simple we don't need an accountant. I just put it on my tax return.