Self Employed - Employing Daughter

clearwing

Hi all
Sorry I am coming across a bit naieve here or even mean.
My daughter does get pocket money, however she also the last few months has been working with me for my sole trader business.
During this time I have been paying her out of my own finances.
What I am wanting to do now though is pay her out of my business trading account and list this on my self assesment return as a legitimate business expense as indeed I would if I had someone do some sub contract work for me. I know the amount of money involved does not seem like a lot but I do not make a vast profit from my business, however I wondered if it would be more tax efficient for me to pay her direct rather than me pay her out of my taxed drawings from the business.

Uncertain

clearwing wrote: »

Hi all
Sorry I am coming across a bit naieve here or even mean.
My daughter does get pocket money, however she also the last few months has been working with me for my sole trader business.
During this time I have been paying her out of my own finances.
What I am wanting to do now though is pay her out of my business trading account and list this on my self assesment return as a legitimate business expense as indeed I would if I had someone do some sub contract work for me. I know the amount of money involved does not seem like a lot but I do not make a vast profit from my business, however I wondered if it would be more tax efficient for me to pay her direct rather than me pay her out of my taxed drawings from the business.

OK fine, it will certainly do that and potentially save you £100 a year in tax. It depends really if you feel it is worth the hassle and paperwork.

It is the same reason that most self employed people seem to need their spouse, if not otherwise employed, to do £7K of cleaning and bookkeeping per year!

Notmyrealname

clearwing wrote: »

Hi all
Sorry I am coming across a bit naieve here or even mean.
My daughter does get pocket money, however she also the last few months has been working with me for my sole trader business.
During this time I have been paying her out of my own finances.
What I am wanting to do now though is pay her out of my business trading account and list this on my self assesment return as a legitimate business expense as indeed I would if I had someone do some sub contract work for me. I know the amount of money involved does not seem like a lot but I do not make a vast profit from my business, however I wondered if it would be more tax efficient for me to pay her direct rather than me pay her out of my taxed drawings from the business.

If she has been doing work for you in your business and you've been paying her, she's been an employee for that time regardless of what bank account you've paid her from. You should've been putting it down as a tax deductible expense from the beginning. You've been unnecessarily paying tax on the money you've paid her.