Employee questions, Payroll advice

[Deleted User]

Hello,

I'm a sole trader who is looking to employ a family member to be my book keeper. They are above state retirement age and the annual pay would be worth £4-5,000. The family member's only other personal income is a pension of approx £200 per month and they share approx £1,200 of their personal allowance with their spouse.

Am I correct that this means that employee pension contributions, NI contributions and PAYE are not required to be deducted when paying the family member? Also as the employer, pensions contributions would not be required from me?

Setting up and running the payroll - I would like to do this myself if possible. Is anyone able to offer advice on this?

Thanks
Dave

runninglea

People above retirement age still have to pay tax.
You say they only get £200 per month, do they get a state pension?

Added to your 5K per annum what is their total income? They still get £11,000 free pay allowance. Tax at 0%

xylophone

If the family member is over SPA then no NI will be payable on the salary.

https://www.gov.uk/workplace-pensions/joining-a-workplace-pension

Auto enrolment would not apply.

The family member has a state pension and a personal pension?

Marriage Allowance applies? https://www.gov.uk/marriage-allowance

Taking a salary of £4000-£5000 might mean that she has some tax to pay, depending on the amount of her other income.

HMRC should supply a tax code.

[Deleted User]

runninglea wrote: »

People above retirement age still have to pay tax.
You say they only get £200 per month, do they get a state pension?

Added to your 5K per annum what is their total income? They still get £11,000 free pay allowance. Tax at 0%

Hi, they get £74.86 a week state pension, I was wrong it's more approx £300 a month. No other income. They share £1050 of personal allowance with their spouse. This leaves approx £ 6350 personal allowance a year.

I'm thinking if they were set up as self employed and I hired them Paying them around £4-5000 a year then NI Class 2 doesn't apply as they are above state retirement age and NI Class 4/Tax @ 20% wouldn't apply as they would not be earning enough to be have to contribute? Please correct me if I am wrong? This option seems easier than Payroll other than the inevitable self employed tax return they will have to do.

Thanks,
Dave

00ec25

dave8989 wrote: »

I'm thinking if they were set up as self employed and I hired them Paying them around £4-5000 a year then NI Class 2 doesn't apply as they are above state retirement age and NI Class 4/Tax @ 20% wouldn't apply as they would not be earning enough to be have to contribute? Please correct me if I am wrong? This option seems easier than Payroll other than the inevitable self employed tax return they will have to do.

Thanks,
Dave

you cannot do that, they would never pass the tests to be genuinely accepted as self employed. They would undoubtedly be classified as your employee

as an employee who is over state retirement age neither they (as employee) nor you (as employer) would have to pay NI

with a gross pay from you of 4-5k, given your other statements about their pension earnings, then yes, provided they notified HMRC of their position so their tax code is dealt with effectively, you would not have to deduct any income tax from the money you pay them

you would nonetheless have to register with HMRC as an employer and submit payroll returns each month