Self Employed And Paying Wife For Work

terryw

Because she will still (presumably) be below the threshold.

blue_monkey_2

So if you employ someone who is working already and earning below the threshold, you just give them money and they are the ones that declare it? Or does the employer declare it to HMRC? I am confused by the way you are working it. I assumed that you would PAYE at BR as it was a 2nd job.

Mikeyorks

ceeforcat wrote: »

In short, if you are paying your wife £50 per week or so for the tasks that you have indicated, I see no problem whatsoever.

But paying his wife is only part of the equation. As he is then going to claim that as a deduction from his profits - otherwise the whole exercise has no benefit?

At that point HMRC will decline any suggestion she is self employed and, because there is other employment, insist on a PAYE scheme being operated :-

If your employee has another job - or other taxable income, such as a pension - you'll need to operate PAYE no matter what they earn. This is because their tax-free allowances will normally be set against the pay from their main job or pension, which means tax may be due on their earnings from you.

terryw

Mike,

On a practical level it is unlikely that HMRC will insist that a PAYE scheme is opened as no tax will be due and it would be a waste of time. But even if they do insist, then it is no great hardship to send in the PAYE returns with nil tax deducted - the wife's personal allowance would simply be apportioned between the two jobs for the sake of coding notices.

ceeforcat

Absolutely right terryw. Of course we all know that the correct procedure is to apply code BR against one of the jobs in the anticipation that, ultimately, we wil arrive at a position where the correct codes are applied with the result of no tax being deducted at either job.

blue-monkey - you will be declaring your wife's wages from your business as a deduction from your profits.

In practice, opening a PAYE scheme in order to submit NIL returns every year is nonsensical. Given your previous indication that your wife earns £3000 elsewhere, I see no problem in paying your wife an amount which keeps her below the NIC limits. There are plenty of other tax professionals on this board who would have corrected this assertion by now had it been incorrect.

blue_monkey_2

I have no wife, a long suffering hubby though, LOL.

I was interested because I had considered giving a friends daughter some work over the summer - not a lot, probably earning £1000 tops with the prospect of earning another £500 over 6 months with bits and pieces she can do from home. She earns about 2.5k where she is now and I had held off because I assumed she would PAYE and have to claim it back at the end of the year. I figured that she would not be interested if she was losing 1/3 of the money but if I can give her all the money then I am sure she would be interested. I just want to make sure I keep within the rules and that she does not get in trouble either.

If she does this for me, the intention was to train her up so I'll not have to close for 6 weeks when we go away on holiday later in the year (again, it's be a wage of, max, £500 total in those 6 weeks as it would mean a few hours every other day). So in total I'd be paying her under 2k before April - way under her threshold.

So this is why I was interested and I assumed that whatever I paid her would be subject to BR Tax and NI.

As an afterthought, do you have to be self employed to pay NI Conts because where she is now pays no NI and I wondered if it was worthwhile her voluntarily registering to pay class 2 anyway - she is a full time student with a part time job (or 2 part time jobs soon).

Pennywise

ceeforcat wrote: »

Absolutely right terryw. Of course we all know that the correct procedure is to apply code BR against one of the jobs in the anticipation that, ultimately, we wil arrive at a position where the correct codes are applied with the result of no tax being deducted at either job.

blue-monkey - you will be declaring your wife's wages from your business as a deduction from your profits.

In practice, opening a PAYE scheme in order to submit NIL returns every year is nonsensical. Given your previous indication that your wife earns £3000 elsewhere, I see no problem in paying your wife an amount which keeps her below the NIC limits. There are plenty of other tax professionals on this board who would have corrected this assertion by now had it been incorrect.

It may be nonsensical but it is what HMRC require as per their webpage:-

http://www.hmrc.gov.uk/paye/intro/register.htm

" When you need to register

You don't necessarily need to register as an employer once you take someone on. Check first that at least one of the following conditions applies to you. If any apply, then you need to register:

• the employee already has another job
• they are receiving a state or occupational pension
• you're paying them at or above the PAYE threshold
• you're paying them at or above the National Insurance Lower Earnings Limit
• you're providing them with employee benefits "

Looks clear enough to me.

FatAndy

Setting yourself up as employer is no big deal, you just phone the number and give a few details and they send you a new employers' pack. The hardest part of the process for me sometimes was understanding what the person on the other end of the line was asking for as some of them have quite broad Scottish accents (apologies for the casual racism but this is true!).

Quarterly returns will simply involve writing 'Nil' on your slips and posting them back in one of the prepaid envelopes they supply.

The one thing that may be a bit tricky is submitting an end of year return, especially doing it online if you've never done one before.

John_Pierpoint

Can anyone point at the rules and regulations that infantalise young people?
I'm not recruiting a team to clean chimneys but I do think that a major problem in our society is teenagers, who think mum and dad have a money tree.
They tend to have totally unrealistic ideas of how they will earn a living on an off shore, deficit financed, island in a global economy.

My kids got jobs from the age of 14, a maturing experience that enabled them to leave university debt free.

ceeforcat

Pennywise wrote: »

It may be nonsensical but it is what HMRC require as per their webpage:-

http://www.hmrc.gov.uk/paye/intro/register.htm

" When you need to register


You don't necessarily need to register as an employer once you take someone on. Check first that at least one of the following conditions applies to you. If any apply, then you need to register:

• the employee already has another job
• they are receiving a state or occupational pension
• you're paying them at or above the PAYE threshold
• you're paying them at or above the National Insurance Lower Earnings Limit
• you're providing them with employee benefits "

Looks clear enough to me.

Agreed - as I have already said - this is what one is supposed to do. In practice, however I would not open a PAYE scheme in this situation.