Can I reduce my tax bill by paying employing my wife?

alanfp

Many thanks for the replies so far (with one exception! i.e. sunnyone).

I'll have a look at those HMRC links, but at least it sounds as though it's worth me making further enquiries.

The fairness of suddenly removing the state benefit, thus penalising families like mine where my wife doesn't work so that she can devote time to our pre-school age children, while still paying it for a couple who both work full time earning £44k each (£88k total, i.e. £40k more than we earn) can be debated elsewhere.

In the same way as the HMRC does, I'm just looking to work within the rules that the government has set, not necessarily bound by logic or morals

Paully232000

Just out of interest when I was reading this thread, could one who earns just over the 40% threshold buy/take/whatever you call it, childcare vouchers as a way of keeping child benefit if the amount you take in child vouchers takes your salary below the 40% threshold?

Thanks

Notmyrealname

HappyMJ wrote: »

It's the offsetting the loss against PAYE that is not permitted. If he was self employed he could offset the income against other income earnt in self employment but not against a regular PAYE job.

WRONG. All income is lumped together and your tax bill is calculated. If you make a trading loss as a sole trader, you have three choices. You can offset it against PAYE and get a refund of some of the tax you've paid through PAYE or you can carry over the loss to previous or future years.

uponahill

alanfp wrote: »

Many thanks for the replies so far (with one exception! i.e. sunnyone).

I'll have a look at those HMRC links, but at least it sounds as though it's worth me making further enquiries.

The fairness of suddenly removing the state benefit, thus penalising families like mine where my wife doesn't work so that she can devote time to our pre-school age children, while still paying it for a couple who both work full time earning £44k each (£88k total, i.e. £40k more than we earn) can be debated elsewhere.

In the same way as the HMRC does, I'm just looking to work within the rules that the government has set, not necessarily bound by logic or morals

Hi, it seems you have been targetted by one of our members (sunnyone). This person appears from nowhere every now and again and posts these spurious comments. Not too sure what the point is behind it.

But never mind, that poster apart, yes the rules are there to be used and just ignore the occassional comments that you might get from the 'its not morally right' brigade.

There is very little that is logical when you consider tax law.
Good luck

uponahill

Notmyrealname wrote: »

WRONG. All income is lumped together and your tax bill is calculated. If you make a trading loss as a sole trader, you have three choices. You can offset it against PAYE and get a refund of some of the tax you've paid through PAYE or you can carry over the loss to previous or future years.

Thank you - that's what I said

chrisotherwise

alanfp wrote: »

Could I start a company and pay my wife say £6k p.a. (she would still be well under the H/rate threshold) in some sort of loss-making venture, e.g. trading on ebay - though technically I don't see that I should have to make any trades - my wife could just spend all her time on researching the market or something, but she'd obviously want paying for it. Could I claim that as a tax allowable expense, submit accounts showing a loss in the year, and net that off against my PAYE earnings, bring my income back down to basic rate?

Cheers

Very unlikely you'd get away with this. As my (very reliable) accountant regularly tells me, HMRC are not fools. They will simply say "This looks like a tax evasion scam, therefore it is one. Get lost."

Some people (notably senior civil servants) get away with this sort of thing by creating a limited company, employing their partner, then invoicing their place of work - but once again HMRC take a dim view (google Arctic Systems for a typical case).

If you really want to avoid paying HRT, pay some more into your pension or take more holidays.

Spendless

Paully232000 wrote: »

Just out of interest when I was reading this thread, could one who earns just over the 40% threshold buy/take/whatever you call it, childcare vouchers as a way of keeping child benefit if the amount you take in child vouchers takes your salary below the 40% threshold?

Thanks

Yes. When we were using childcare vouchers to send our DD to nursery 3 days a week whilst I was at college the amount on the P60 was reduced when we submitted our claim to tax credits for that year. I keep on waiting for the Government to dot the i's and cross the t's on the CB issue. I'm wanting to know if benefits in kind will be added on as income the way it is for tax credits and what is being done about the HRP (or whatever its now called) for women not working or not earning enough to pay NI.

We will feel the loss of CB when it happens despite hubby being a 40% tax payer as his net income is that of someone not paying higher rate tax due to his company car giving him a negative (k) tax code. I lost my job recently, am struggling to find another due to living in an area hard hit by recession and we still have the expenses of a car despite the company one, as without it it would make job hunting even more difficult than it currently is.