Sole trader paying spouse?

robynandedward

I would like to ask for some advice regarding my husband's business, I am new to the forum.
I am currently doing a lot of the administration work for the business. I am no longer working due to an injury I sustained on my back a while ago, I may at some point return to employment but for the time being I am assisting my husband with the day to day running of the business. Am I able to take a wage from the business for the work that I do if my husband is a sole trader. I do approximately 12-15 hours per week so the wage would be around £100.00 per week. Would I have to become self employed and then invoice the business for the work I am doing or is there a simpler way? I am not in receipt of sick pay or any other disability benefit but our household does receive child tax credits.

Many thanks for your time.

HappyMJ

You could become a PAYE employee of the business. The business would run a payroll and pay you deducting tax and national insurance.

You could become a joint owner of the business and be self employed. You'd have to pay national insurance contributions yourself and fill out a self assessment tax return every year. You don't invoice the business as a joint owner you just split the profits between you as partners in the business and declare your portion on your tax return and your husbands portion on his tax return.

Apollo26

If you're only earning £100 per week, there would be no tax or NI payable

molerat

Maybe better earning £112 pw.

ACG

Keep it under the NI threshold otherwise your husband has to sent up a pension scheme - even if you choose to not take part in it.

You can be self employed and invoice him or you can become a paid employee of the company. It might be worth speaking to an accountant. If husbands income is above £25k then there can be tax benefits of becoming a ltd company.

dave2

Yes you can go on PAYE/payroll. HMRC may take an interest if your husband got an inspection but it's all fine if you can demonstrate you do actually work for him and not just there on paper for tax purposes.

Historically the optimal position (at a household income perspective) would be £112pw as here you don't actually pay any NIC but the government counts it as if you did for certain state benefits. The figure changes annually so check every April. The wage bill would also mean your husband has lower profit so he has less tax to pay, if you don't have other income you won't be paying any so there's an overall saving.

If the business does not currently have any payroll then obviously the downside is the administration costs/hassle of running the payroll and potential for penalties for missing filing deadlines etc.

I don't know how £112pw plays in with the pensions auto-enrolement. You would be below the threshold but you should check that it would not trigger the business having to set up a scheme anyway - I expect it wont but you can't rely on common sense.

There is also potential downside in how it might affect your current benefits entitlement, I suppose it might even be advantageous, though I couldn't hope to help on this.

One other thing, if you pay for things (e.g. expenses) then get reimbursed by the business, once you are an employee get hubby to apply for a dispensation (there's also a paper form somewhere). This isn't required if the only expenses being claimed are under the mileage scheme.

Presumably your husband has an accountant, he should take advice from them before doing anything.