Sole trader -Paying the mrs/partner

Mbsun

How it works, the split for our gang is 39% to each bricky, 22% to the labourer. We build houses but its the same basically across the industry. We work for a brickwork subcontractor, i put our "measure" in to him, he bills the house builder (keepmoat/ persimmon etc etc). The brickwork subcontactor is likely not paid on a weekly basis like us, and has more liability i guess. I suppose we are individual subcontractors (who work as a team), to the brickwork subcontractor.

Like i say, the entire construction industry works like this, none of us are whst i would class as self employed, but we certainly have zero employment rights either. Its all immoral to me, but it is what it is

I havent always earned this amount, but i expect to going forward. I worked for a local authority during the recession and came back to this 4 years ago, the first 2 years were in the mid 30k region.

The accountant i have always used is probably more an agent, most accountants tradesman use probably are. I guess there comes a point where paying for expert advice maybe worthwile

00ec25

Mbsun wrote: »

Fwiw, common law- been together 9 years, live together, own a house together, have a daughter together, but not married

irrelevant for tax

https://www.citizensadvice.org.uk/family/living-together-marriage-and-civil-partnership/living-together-and-marriage-legal-differences/

Mbsun wrote: »

How it works, the split for our gang is 39% to each bricky, 22% to the labourer. We build houses but its the same basically across the industry. We work for a brickwork subcontractor, i put our "measure" in to him, he bills the house builder (keepmoat/ persimmon etc etc). The brickwork subcontactor is likely not paid on a weekly basis like us, and has more liability i guess. I suppose we are individual subcontractors (who work as a team), to the brickwork subcontractor.

so what you describe is standard operating procedure for "gangs" on construction

https://www.gov.uk/what-you-must-do-as-a-cis-contractor/who-is-covered-by-cis

Your gang-master acts as your "mainstream contractor", they take money from the actual client, they pay you your share of the money, but they, as gang-master, must legally deduct tax from your share and as gang-master are legally required to pay it over to HMRC on your behalf

your lover will simply become another member of that gang and be paid via the gang-master. She will need her own CIS registration and tax identity with HMRC

Mbsun

" gang master" i would take to be the brickwork subcontractor i work for yes. 20% of our wage is deducted which is then "held" to pay your tax and ni

What worries me is this- my mrs coukd not work full time, as she has to get daughter to and from school, therefore i am looking at part time, if i brought her to work to be part of our gang, but actually a part of my part of the gang (to help me do the parts of my job i struggle with), her work would gain the gang little if anything in terms of gross income, she would though be helping me immensely, and making my life easier. Of course the aim would be to make her cut, enough that she used up all her tax allowance inc expenses, and kept me out of any higher rate. On its own without any benefits she may bring to the gross income of the gang , the tx savings to me i estimate at around 6k per year net. So from a financial perspective, looking at what she brings to the table vs what she costs, its a no brainer, even if she was hopeless she is pretty much paid for in tax savings!
My fear is hmrc wouldnt wear that perspective and would hammer me and as i mention what i do is not an hourly rate type of thing, you cant just look on a job site and access a competitive hourly rate for this type of work

hopon

Mbsun wrote: »

The accountant i have always used is probably more an agent, most accountants tradesman use probably are. I guess there comes a point where paying for expert advice maybe worthwile

Tbh that is the problem with a lot of accountants that do CIS based returns - they are thrown together with very little planning.

For simplicity for you the easiest option is for your mrs to get registered as self employed and as a subcontractor then just get your gang master to adj the rates paid so that you get say 29% and she gets the other 10%, that will fully use her allowance and bring you back down to basic rate tax without the additional hassle of partnerships/company setup etc.

Whether there is a benefit in going ltd is another question but brings in other points such as vehicle used etc.

TheCyclingProgrammer

Mbsun wrote: »

Fwiw, common law- been together 9 years, live together, own a house together, have a daughter together, but not married

But “common law” is a meaningless term. I mention it as it’s somewhat of a myth and people can be caught out thinking their unmarried partner has rights that they don’t actually have.

I know it’s not relevant to your original post but if you don’t have a will you may want to consider getting one to ensure if something happens to you that your partner can inherit from you if that is your choice.

TheCyclingProgrammer

uknick wrote: »

If you are paying her for the work she does then have to be either an employee or a sub contractor. If she is a sub contractor then she has to be registered as self employed with HMRC. But, if she is only working for you she'll probably fall foul of the IR35 rules, i.e. she is really an employee and as such you will have to pay employers' tax obligations; national insurance and possibly pension scheme

So OP is not confused, IR35 not relevant here, it doesn’t apply to self employed people, only those working through intermediaries. The rest is correct though.

Keep_pedalling

Mbsun wrote: »

Fwiw, common law- been together 9 years, live together, own a house together, have a daughter together, but not married

If your net worth is over £325k you really should formalise that relationship if you don’t want to risk leaving an IHT burden on your loved ones., and definitely do not risk dieing without having a will in place.

Pennywise

hopon wrote: »

Tbh that is the problem with a lot of accountants that do CIS based returns - they are thrown together with very little planning.

The problem is more likely they're not "accountants" at all. They're more likely to be book-keepers calling themselves accountants. After all, it's not a protected name like solicitors, architects, doctors, etc., and there is no regulation re competency requirements, PI insurance, etc. Whereas the properly qualified/regulated accountants, such as members of Chartered Institutes have to jump through hoops to retain their permissions to practice!

tebthereb

Just to pick up on some points made earlier, in a partnership it is not necessary for the “wife” to be doing any work or to be paid to be entitled to profit share.

With regards to another comment about it perhaps being necessary for customers to pay a partnership instead, if this was an issue I think payment arrangements could continue as before. The partnership agreement could clarify what payments to individuals had to be brought into account for partnership “accounts” purposes and need not reflect cash movement.

I would be surprised if setting up a limited company would be worthwhile at this level of income.

All the above makes me sound like a fan of using partnerships but I agree with other comments that the OP should seek proper advice.

Pennywise

tebthereb wrote: »

Just to pick up on some points made earlier, in a partnership it is not necessary for the “wife” to be doing any work or to be paid to be entitled to profit share.

IR35 applies to partnerships and OP isn't legally married,so a partnership isn't a magic bullet answer here - it doesn't solve the issue of the partner having to do work to the value of what she's paid.