employed & self employed???

Jacka87

Firts time poster on this forum so please go easy!

Just to fill in, I have a full time job with a salary arounf the UK average. My gf has a job but her salary is pretty low in comparison. I have the option of buying part of my dads business and being able to run that part time (business is seasonal and most work at weekends).

I am concerned that allthough this will allow me to serioslly boost my income, it will prob take me into the next tax threshold and was also concerned how it would impact my current tax situation with work?

I was curious if there was anyway where the small business could be run by my gf, meaning she would pay the tax but in some way keep the business in my name, As some sort of director or something?

This I know would mean my gfs income is boosted instead of mine but in the event that we split, the company would still be in my name as I was a director or something???

PS my gf cant buy the business, she doesnt have the funding, nor the contacts to run the business that is dependent on me, and the fact that my dad is only willing to sell this part of the business to me or my sister.

Thanks for any help.

Pennywise

Two options.

Firstly go into business partnership with your OH - get a contract drawn up clearly agreeing the beneficial ownership split. Then you can allocate a share of profits to her, whilst keeping your overal income below the HR threshold. As long as it's a true partnership, i.e. you are both liable to debts etc., then you can pay her whatever share of profits you like, not necessarily linked to her physical work in it. Profit share doesn't have to be in proportion to ownership share.

Secondly, be a sole trader and employer her - you can pay her a wage, but only as much as her contribution is worth, so you have to pay a realistic hourly rate for the work she does.

Of course, there are other potential ideas, such as keeping the profits yourself, but investing enough into a private pension to keep you out of higher rate tax, or even just accepting the HR tax - it is after all, only at 40% for the portion of your income over the threshold, so most of your income would still be taxed at 20%.

It shouldn't affect your PAYE job at all. There's no reason for your PAYE code to change so your wages, tax and NIC should just carry on untouched. It is through your annual SA tax returns where you'd pay the tax/NIC on the business profits.

Jacka87

Thanks Penny Wise,

I was under the impression for suome reason that if I earned extra money it would mess with my PAYE side of things. If it doesnt do that then I think I may as well just buy it in my name, pay my other half what she earns and sort the tax via SA.

Just another little question, is it possible to do your tax through SA easily enough or would I need an acountant to sort it. I am an engineer so have a decent grasp of numbers etc just dont want to spend all my time going through SA stuff if its really time consuming and difficult?

orangeslimes

Jacka87 wrote: »

Just another little question, is it possible to do your tax through SA easily enough or would I need an acountant to sort it. I am an engineer so have a decent grasp of numbers etc just dont want to spend all my time going through SA stuff if its really time consuming and difficult?

If I was you - I'd get an accountant - it is difficult to get right and there are many baffling rules which are hard to make sense of. (but you can do the basic bookkeeping bit yourself)

Pennywise

orangeslimes wrote: »

If I was you - I'd get an accountant - it is difficult to get right and there are many baffling rules which are hard to make sense of. (but you can do the basic bookkeeping bit yourself)

Couldn't agree more. Get an accountant from the start, get them to tell you what book-keeping to do and to run through what expenses are claimable and what aren't etc. Then do the books etc yourself and give the accountant your records at the year end to do your accounts and tax. You'll save yourself a lot of money and time/effort/stress if you work with a good accountant from day one - it's an investment, not a cost.

The worst thing to do is go it alone, muddle through with not really knowing what book-keeping to do, and then hand over a mess to the accountant a year later who'll spend a lot of time trying to make sense out of chaos - that you'd be paying for.

As an example, one of our best "trained" clients only gets charged a couple of hundred pounds a year for his accounts and tax return because he let us set him up properly with a good book-keeping system years ago. By contrast, we've just charged just short of a thousand pounds to a new client who tried to do it himself but ended up in a right mess meaning we had to spend the best part of a week virtually re-creating his book-keeping.