'Employing' a spouse who is also SE

ViolaLass

I get freelance work, sometimes more than I can manage. My husband has proposed that he could do some of the work for me (as I am trying to build my business up so don't want to turn work down at the moment) as and when I have too much.

We are both already registered SE. I imagine I would technically be employing him - it saves him applying for the same work and I would be checking his work before it was handed in in my name.

Can I simply pay my husband the money I earn for a piece of work (no more, possibly 10% less to cover my time in checking his work)? Are there any tax implications e.g. would I have to pay NI for him? Anyone done this and had any problems? I'm not trying to bend the law - as far as I can see, it's within the law, but is it within the spirit?

ViolaLass

Thanks for your answer jimmo. I'll do my best to answer your points.

Firstly, I do transcription so it's not something that particularly requires qualifications - it's just that if you don't have experience then it's hard to get into. In that sense, OH is perfectly qualified to do the job. He would be paid a fixed rate for the job so if he has to go back and redo bits, he wouldn't get any extra (as neither would I). If he didn't do the work to the required standard, he wouldn't get paid. I would pay him the same rate that I would receive, possibly, as I said, minus a small amount that I would pay myself for the time I would take to check his work.

In this first year, it doesn't look like either of us will earn much - certainly not enough to put us in the higher tax rate! In fact, it could be that by passing work on to my husband that we would both not earn enough to pay tax at all. He might earn up to £2k from the work I pass on to him. Is this something that the tax office would get very suspicious about? Is there anything I can do to help - such as declaring it in advance - or should I just be prepared for them to be suspicious and be happy to answer their questions? Will they automatically see it as a tax dodge? As I say, I don't want to break any laws - my husband genuinely would do the work and I benefit because it would help build the business.

fuzzball172

I have just gone into partnership with my wife as she is now helping with the workload, maybe that could be a solution, but the sub-con looks the easiest to me. Just make sure he invoices you for the work completed and that you are not his only customer as that can cause problems too.

Lee

ViolaLass

jimmo wrote: »

To me, transcription service means something like copy typing or audio typing. Whilst, nowadays, we can all do that on a computer I suspect most of us would fail miserably to match the speed, accuracy and presentation skills of a properly trained typist. Spell checkers can do so much but not enough for the likes of me to even dream of making a living wage out of my transcription skills.
If I am wrong then I apologise but if I am close, there is nothing really significant in the nature of the work for the Taxman to latch onto.
However, what would get me twitching in my working days would be idea that if you sub-contract work worth £2,000 to your husband the overall result would be that neither of you will be liable to tax.
The taxman in me asks how on earth you need to engage any sort of assistance in generating relatively low income.

Hi jimmo,

I'm a bit confused by your first point - you seem to be saying that transcription couldn't be done by just anybody and that therefore "there is nothing really significant in the nature of the work for the Taxman to latch onto." Sorry, I don't get what you're saying.

Anyway, your second question is valid but easy to answer. My husband and I recently began what we hope will be five years of travelling the world. We want to earn money as we go to fund the travelling but we don't want to work full time (plus, we don't need to to earn enough just to live). My husband works as a wedding photographer but you'll appreciate that that is not regular work. The beauty of my transcription work is that it is somewhat more regular and it can be done anywhere as long as we have internet. It also doesn't require the level of expertise that photography does. So, in order not to have to turn work down when it does come, I want to pass some of it onto my husband (equally, I then don't have to spend the whole week working while he plays on the beach!). The hope is then that we will have built me a nice little business by the time we come back to settle (I stress, for /me/ - my husband hopes to make his living from the photography).

We've both registered as SE with HMRC for two reasons. One, I like the peace of mind of knowing that I'm being legal and 2, there is a possibility that I may earn just enough to have to pay NICs, if not income tax, and this year will then count as a qualifying year. Given the kind of things I want to pursue when we get back, clocking up qualifying years when I can seems like a good idea.

fuzzball - thanks for your input. It looks like sub-contracting with invoices would be easiest for us. I would be his only source of transcription work but he gets other work (photography) from elsewhere so I wouldn't be his only source of work overall. Is that the kind of thing you meant?

fuzzball172

yes. When I first started my business I was working pretty much exclusively for a single client for a short period. I was advised to make sure that I had other customers otherwise it would look like I / we were just trying to beat the PAYE / employers contributions system.

Lee

supermonkey

jimmo wrote: »

As things stand there seems to be no reason why both you and your husband even have to register as self-employed with HMRC because neither of you are generating profits which give rise to a tax liability. Its an old adage in HMRC that we only catch the greedy but it really is true.

Hello, I just wondered if you could clarify this - you suggest only declaring once you are generating profits?

Thanks

BoGoF

supermonkey wrote: »

Hello, I just wondered if you could clarify this - you suggest only declaring once you are generating profits?

Thanks

I would suggest against this. If you do not register within 3 months of commencement for NIC purposes you will incur a £100 penalty.

supermonkey

jimmo wrote: »

As things stand there seems to be no reason why both you and your husband even have to register as self-employed with HMRC because neither of you are generating profits which give rise to a tax liability. Its an old adage in HMRC that we only catch the greedy but it really is true.

supermonkey wrote: »

Hello, I just wondered if you could clarify this - you suggest only declaring once you are generating profits?

Thanks

BoGoF wrote: »

I would suggest against this. If you do not register within 3 months of commencement for NIC purposes you will incur a £100 penalty.

Thanks, BoGof, that was my thoughts, but having a taxman suggest it got me thinking.

Jimmo - could you clarify?

supermonkey

thanks jimmo, very useful information, particularly post 25
http://forums.moneysavingexpert.com/showpost.html?p=22871963&postcount=25

To briefly explain my situation, I'm on JSA & considering going self employed. Im just working out when I would declare as I may get no work, or I may get a one off and nothing for months.

Thanks

supermonkey

Hi Jimmo,

Have only just seen your reply on here, sorry for the delay in getting back to you. The nature of the work is mainly cad design. I have taken on a first project, but with software costs etc will hardly make anything on this. There is also no guarantee of additional work, so I do not want to lose out on benefits over a one off thing.

Once the project is complete, I will invoice the company and receive payment at the end of the month.

What I am wondering is whether I can use the date the invoice is sent as the business start date? And if so, can I postpone the invoice (if agreeable to the company paying me).

I am keen to get things running, but if I waited until 6 months of JSA I would receive help with start up costs...

Thanks

supermonkey

Ooops, that might have been a bit rude! I welcome replies from all!