Can I pay my partner to reduce tax?

TuftyMatt

Hi everyone,

I pay high rate tax in my full time job and earn money each month as a self employed consultant for a friends business.

To reduce tax could I get my partner, who is a housewife on no income, to invoice me for work I could get her to do?

My point is the extra income is not much and 40% of it going in tax makes it hardly worthwhile at this stage :mad:. If my partner could do some of it and reduce my profit / tax then it's more worthwhile :T.

Could I just pay her cash and keep copies of her invoices for my tax records?

Would she have to register as self employed even though she would not earn enough to pay tax on?

Thanks in advance.

John_Pierpoint

In theory yes.
BUT she must earn the pay at the going rate.

I doubt she would be self employed with only one client.:eek:

If you work your way down this thread you will find the rules and suggestions.

https://forums.moneysavingexpert.com/discussion/2616235

http://www.ukbusinessforums.co.uk/forums/showthread.php?t=68883

http://www.ukbusinessforums.co.uk/forums/showthread.php?t=60813

laticsforlife

John_Pierpoint is spot on, you must pay only the going rate, and for real duties, not just 'oh she answers the phone every now and then so I'll pay her £10,000'

She'd be an employee, so long as you keep her wage under the PAYE limits, it means no need for a scheme, but I'd advocate making it as genuine as possible, so real duties, a real wage paid to he (preferably to her own account), and good records from you.

And when we talk about going rate, if the duties could realistically be done by any other adult, then perhaps the rate should be minimum wage on a part-time basis.

EG 2 hours a day x £7 an hour = £70 a week, sounds reasonable (and more importantly HMRC will also view it this way)

TuftyMatt

Ok let me see if I have this right.

If I pay her minimum wage for a few hours a day then we are both covered.

I will pay it into her account and keep records of the payments.

Do I or she need to make contact with HMRC at this stage or do we wait until I submit my SA form?

Sorry but I am new to this game as I have been a wage slave all my working life and a spreadbet trader in recent years to avoid tax problems.

Gertie_Walker

If you are paying her at below the NIC threshold (£97 pw) then you dont inform HMRC. If you are paying her over that, you need to register as an employer with HMRC.

TuftyMatt

Thank You Gertie Walker,

Sub £97 a week it is then.

I will keep all records and submit my SA forms at the right time.