employing family member

katykitten

i am a sole trader and have been employing my son off and on for the past 3 years, giving him cash for a range of different jobs. i would like to pay him a full years pay retrospectively for last year and would like it to be as simple as possible. Do i have to pay NIC's and register him as an employee, what is the threshold for me paying hiim so that he doesnt have to pay tax - hes a 23 yr old student?

many thanks

anselld

katykitten wrote: »

i would like to pay him a full years pay retrospectively for last year

... for real work or tax avoidance on your part?

McKneff

If youve been paying him for the last 3 years, why are you wanting to pay him again for the last year.

Sounding dodgy missus.

cte1111

Anyone you employ including family members should be on your payroll, unless self employed in which case they should be supplying you with invoices.

A student can fill in a form to state they are only working for you in the holidays, to avoid them being taxed and having to reclaim it:
http://www.hmrc.gov.uk/forms/p38s.pdf

This only applies if their income for the tax year is going to be under the tax threshold. How much are you intending to pay your son? Has he worked a number of hours to reflect this? You need to ensure that he has worked hours commensurate with the amount that you are paying him.

See here for more info:
https://www.gov.uk/contract-types-and-employer-responsibilities/employing-family-young-people-and-volunteers

and
http://www.startupdonut.co.uk/blog/2011/11/tax-rules-about-employing-family-members

katykitten

cte1111 wrote: »

Anyone you employ including family members should be on your payroll, unless self employed in which case they should be supplying you with invoices.

A student can fill in a form to state they are only working for you in the holidays, to avoid them being taxed and having to reclaim it:
http://www.hmrc.gov.uk/forms/p38s.pdf

This only applies if their income for the tax year is going to be under the tax threshold. How much are you intending to pay your son? Has he worked a number of hours to reflect this? You need to ensure that he has worked hours commensurate with the amount that you are paying him.

See here for more info:
https://www.gov.uk/contract-types-and-employer-responsibilities/employing-family-young-people-and-volunteers

and
http://www.startupdonut.co.uk/blog/2011/11/tax-rules-about-employing-family-members

i pay him just under £100 per week, and he works around 15 hours for this, i havent paid him for almost a year (at his request) as he spends it straight away and wants to travel next year! Can i pay him all in one go or is this not allowed?

agrinnall

If he was actually working for you last year you should have been paying him at least NMW (which the pay rate you mention is, but zero isn't). Presumably you kept payments in previous years below the NI LEL so you didn't need to operate PAYE for him - if you now pay him £5K in one go I think you would have to do it through PAYE and both you and your son would be liable to pay NI on that amount. If he has no other income then he shouldn't need to pay any tax as long as he either has a P45 or completes a P46 for you to apply.

LittleVoice

agrinnall wrote: »

If he was actually working for you last year you should have been paying him at least NMW (which the pay rate you mention is, but zero isn't). Presumably you kept payments in previous years below the NI LEL so you didn't need to operate PAYE for him - if you now pay him £5K in one go I think you would have to do it through PAYE and both you and your son would be liable to pay NI on that amount. If he has no other income then he shouldn't need to pay any tax as long as he either has a P45 or completes a P46 for you to apply.

If the son was living with this employing payment then I believe this is an exclusion from the requirement to pay NMW.

getmore4less

Don't forget paid holidays.

Family members are excluded from NMW.
(living at the employers)

http://www.unison.org.uk/file/National%20Minimum%20Wage%202012-13%20Factsheet.pdf

https://www.gov.uk/your-right-to-minimum-wage/who-gets-the-minimum-wage

hethmar

Remember also, you will need to include him as an employee for your Public liability insurance too.

cte1111

LittleVoice wrote: »

If the son was living with this employing payment then I believe this is an exclusion from the requirement to pay NMW.

That's not the case, look on the link I posted earlier for details.

cte1111

katykitten wrote: »

i pay him just under £100 per week, and he works around 15 hours for this, i havent paid him for almost a year (at his request) as he spends it straight away and wants to travel next year! Can i pay him all in one go or is this not allowed?

Having looked at the information, I don't see why not. You're effectively still paying him £100 per week for 15 hours work, which is over minimum wage but under the lower earnings limit. When you actually give him the money is up to the pair of you.