Additional Income.

Samsung_Note2

Hopefully a quick and easy question...

Wife does part time cleaning and earns around £100 odd a week..were looking at remortgage or maybe looking to move (not sure yet).

Mentioned this to Halifax mortgage adviser and they said she should register as self employed as the £100 odd a week she gets will make a big difference when added to her PAYE work...however i was under the impression you had to have 2 years accounts for them to be considered as income.

If she registers with HMRC now and we look at remortgage or moving end of October is there anything to be gained.

butterflybook

Usually a lender will want 1 years of accounts minimum to consider as income for mortgage purposes most lenders will want 2 years

Samsung_Note2

butterflybook wrote: »

Usually a lender will want 1 years of accounts minimum to consider as income for mortgage purposes most lenders will want 2 years

Thank you..thats what i thought would be the case,no idea why the Halifax adviser stated other wise.:(

sal_III

Samsung_Note2 wrote: »

Thank you..thats what i thought would be the case,no idea why the Halifax adviser stated other wise.:(

Probably because he expected that your wife has been doing this for more than 1 year and has been paying taxes. If she hasn't (been paying taxes) you should stop mentioning this income until she starts doing so.

lindens

still worth doing surely - as it's the law. And useful for future re-mortgaging in 2 years' time

middleclassbutpoor

If your wife has been doing this for a prolonged period of time and is her only income then there is nothing lost in registering for Self Assessment as she won't pay tax on these earnings.

Equally you may be able to claim 10% of her personal allowance dependent on your earnings.This could then increase your take home pay slightly but it's 'free money'.

It would also be worth completing a BR19 check to ensure your wife has sufficient NI contributions to claim a state pension. If not, another reason to register is so you can voluntarily start paying these to help you in retirement.

If this work is additional income to her normal work, then you are potentially putting yourself at risk as if there is any suspicion of tax evasion, your broker/adviser is duty bound to report this or else they could end up being culpable.

kingstreet

How many people does she clean for?

Samsung_Note2

Not sure why mortgage adviser suggested getting her registered to help with Mortgage..she knows wife has only been doing it for a short while,so sounds like couldn't/wouldn't be included anyway.

Her part time paye work is only £150 ish a week so with the cleaning and part timer she would still be under her tax threshold.

Will get her set up with my accountant as my tax returns only cost me sub £60...and as mentioned will help for future lending we might need.

Samsung_Note2

middleclassbutpoor wrote: »

If your wife has been doing this for a prolonged period of time and is her only income then there is nothing lost in registering for Self Assessment as she won't pay tax on these earnings.

Equally you may be able to claim 10% of her personal allowance dependent on your earnings.This could then increase your take home pay slightly but it's 'free money'.

It would also be worth completing a BR19 check to ensure your wife has sufficient NI contributions to claim a state pension. If not, another reason to register is so you can voluntarily start paying these to help you in retirement.

If this work is additional income to her normal work, then you are potentially putting yourself at risk as if there is any suspicion of tax evasion, your broker/adviser is duty bound to report this or else they could end up being culpable.

Whilst i understand what your saying regards Tax evasion..i dont see how £100 a week is going to be a major concern,do we all declare earning from Ebay or carboot sales...no as its small amounts.

If she was a company racking in thousands then i could see the issue,but a middle aged woman cleaning for Pin money...hmm lol

sal_III

I'm not judging or anything but being a "small fish" doesn't change the fact that she might have to pay tax. £150+£100/week is definitely over the NI threshold, and possibly over the income tax personal allowance, depending on how many weeks she works.

If there is no tax due - even better, get the income documented so it can help you with the mortgage someday.

You should know that HMRC is more than happy to go after "small fish", as they are to scared to go after large corporations paying token tax.

middleclassbutpoor

Samsung_Note2 wrote: »

Whilst i understand what your saying regards Tax evasion..i dont see how £100 a week is going to be a major concern,do we all declare earning from Ebay or carboot sales...no as its small amounts.

If she was a company racking in thousands then i could see the issue,but a middle aged woman cleaning for Pin money...hmm lol

Flogging the odd thing that you already own on ebay or at a carboot is probably not classed as a business or get the HMRC on your back.

However If you are buying and selling - i.e. trading then it probably is a business and should be declared and of course they will be interested.

It's like saying people should not declare a change in circumstances to keep earning benefits because it's only £50 a week... You are basically cheating the taxpayer and those who do things correctly.

Likewise £150 a week or £7200 a year for a bit of weekend work would be of interest to the HMRC as it's a business and she is self employed as she is being paid to provide a service. Its not the same as flogging some old items you no longer need. For those earnings, for me its a no brainer to declare it and do it by the book - its not like it's going to cost you much to be 'legit'.