Paying Wife a wage I'm self emloyed

Just_caring

I am self employed and have been told I can pay my wife a wage up to £100 per week for the admin role re does for me and this will be shown as a deduction for tax purposes.
1) Does she have to declare herself as Self employed to the tax office
2) Do I physically have to transfer monies to her weekly/monthly so that there is a paper trail for the tax office to see
3) She has no other income but claims carers premium (stamp only put on) for looking after her elderly relative.

Any advice would be appreciated.

saveallmymoney

1) Yes
2) She needs to invoice you, and you need to pay the invoice

Pennywise

Firstly, she can only be paid for hours worked at a normal hourly rate, so for £100 per week, you'd be looking at something like 10 hours at £10 per hour.

Secondly, whether she's employed or self employed is a matter of HMRC rules, not your choice. Unless she has other clients, uses her own equipment, etc., she's unlikely to pass the "self employment" test and would therefore be your employee. You'd then have to register as an employer and make submissions to HMRC every payday.

Yes, you do have to pay her, either to her own personal bank account or to a joint bank account.

By the way, £100 isn't the optimal pay level, it's actually £155 per week where there's no tax nor national insurance payable, but you'd get full tax and NIC relief as a profit reducer on your tax return.

NYM

Then there is the workplace pension to consider...

Ems!

1) No - she would not be self employed. You need to set up a payroll and pay her through that.
2) Yes

Dazed_and_confused

Pennywise wrote: »

Firstly, she can only be paid for hours worked at a normal hourly rate, so for £100 per week, you'd be looking at something like 10 hours at £10 per hour.

Secondly, whether she's employed or self employed is a matter of HMRC rules, not your choice. Unless she has other clients, uses her own equipment, etc., she's unlikely to pass the "self employment" test and would therefore be your employee. You'd then have to register as an employer and make submissions to HMRC every payday.

Yes, you do have to pay her, either to her own personal bank account or to a joint bank account.

By the way, £100 isn't the optimal pay level, it's actually £155 per week where there's no tax nor national insurance payable, but you'd get full tax and NIC relief as a profit reducer on your tax return.

Ignoring for a moment the rights and wrongs of the op paying his wife in the first place and if £100/week is acceptable why would he need to register as an employee and make submissions every payday?

If op already employs others he will presumably already be registered as an employer and if not then there doesn't seem to be any need to register or am I missing something obvious here?

Suggested payment is £100/week and op states wife has no other income

Just_caring

Just to clarify I am a self employed person with no employees but my wife does my paperwork inc invoicing, typing up quotes, fetching materials from suppliers etc, I have been told I can pay her a wage hence the question, she has been doing this work unpaid in the past.

Dazed_and_confused

Just_caring wrote: »

Just to clarify I am a self employed person with no employees but my wife does my paperwork inc invoicing, typing up quotes, fetching materials from suppliers etc, I have been told I can pay her a wage hence the question, she has been doing this work unpaid in the past.

This is a link to the gov.uk page which takes you through the process of whether you need to register as an employer or not.

https://www.gov.uk/register-employer

From what you've said so far I don't think you would need to register but you should go through the checklist on gov.uk yourself to be certain.

Remember if things change e.g you pay your wife a higher wage or she gets a job elsewhere (including part time) or starts to get a pension then this means you likely would need to register as an employer.

If you do decide to employer her and aren't registered as an employer make sure you keep good records of what you've paid her and when you paid her etc as you won't have normal "payroll" records to support this if HMRC ever asked you about your expenses.

Has your wife applied for marriage allowance? From what you've said she would be eligible and if you are paying tax at the basic rate it would benefit you by upto £212 for last year.
Note as has been discussed to death on otherpMSE threads you cannot claim this when you fill in your tax return. Your wife, as the lower earner must apply for it and it will eventually reduce the self assessment tax you have to pay for last year by upto £212.

Just_caring

Thank you Dazed & Confused for the info but there isn't a link to gov.uk showing. My wife has done the marriage allowance transfer.

sheramber

Is carer's premium taxable income?

Dazed_and_confused

Just_caring wrote: »

Thank you Dazed & Confused for the info but there isn't a link to gov.uk showing. My wife has done the marriage allowance transfer.

It's there now