Freelancing and paying the tax

quentinfarquar

I'm currently a partner in a business paying 40% tax. My wife is currently on maternity leave we are now in the 6months unpaid bit. She works in the NHS.

I get quite a few jobs which I can get my wife to do on a freelance basis, it will obviously mean she will have a small income and I get more time away from work, and save tax.

Question is how do I go about declaring the extra for my wife, is it just a case of asking for a tax return. Or is this alot of hassle?

Elaine_Wilson

If she does work on a freelance basis then she is self-employed.

She needs to register as such within three months of starting this work. She should complete form CWF1 (downloadable from HMRC website) which will register her as self-employed and also for paying class 2 national insurance contributions.

She ill then automatically receive a self-assessment tax return to complete.

WHA

If she registers as self employed, you must only pay her a market rate for the work she does. Also, the nature of the work she does for you must be self-employed, not that of an employee, i.e. a contract for services, not a contract of service, so she should be using her own equipment, be free to work her own hours, be free to do the work however she wants, i.e. minimum control over her services, otherwise HMRC could decide she was really an employee and charge tax and NIC on you as an employer. Does her NHS contract of employment allow her to work elsewhere or run her own business - you need to check as she may be in breach of contract. HMRC website is a very good place to do plenty of research into how to register, what records to keep, how to complete tax returns, etc., also she needs to think about NIC and whether to claim an exemption if she is eligible.