How little can I get paid?

skycatcher

I'm in a partnership with my wife (not limited company - just like a sole trader arrangement). We have our hours split (and hence earnings) asymetrically in her favour. Togther we are both under the personal allowance. Later this year I will get a deferred pension which will take me well above the personal allowance. My question therefore is how litle can I pay myself from the business and still be considered as self employed in order to pay Class 2 NIC?

Thanks

Pennywise

You can split partnership profits any way you, as partners, choose unless the split is specified in the partnership agreement. If your share is below the nic threshold, you can opt to make voluntary payments. It would make sense for your share to use up your remaining tax free personal allowance so you don't pay tax, as long as your wife's share doesn't then push her into basic rate tax band.

skycatcher

Pennywise wrote: »

You can split partnership profits any way you, as partners, choose unless the split is specified in the partnership agreement. If your share is below the nic threshold, you can opt to make voluntary payments. It would make sense for your share to use up your remaining tax free personal allowance so you don't pay tax, as long as your wife's share doesn't then push her into basic rate tax band.

Thanks Pennywise. Can I opt to take £0 and remain a partner, hence not paying any additional tax (over and above my pension that will be taxed) and still pay voluntary class 2 NIC?

Pennywise

skycatcher wrote: »

Thanks Pennywise. Can I opt to take £0 and remain a partner, hence not paying any additional tax (over and above my pension that will be taxed) and still pay voluntary class 2 NIC?

As long as both partners agree and it's not in contravention of your partnership agreement, then yes. Should be no problem as long as you both really do work in the partnership and it's not just a scam to allocate profits to a non-working spouse.

skycatcher

Pennywise wrote: »

As long as both partners agree and it's not in contravention of your partnership agreement, then yes. Should be no problem as long as you both really do work in the partnership and it's not just a scam to allocate profits to a non-working spouse.

Thanks again. No its not a scam - we both work equally though for tax reasons it would be of benefit if she took all the profits from now on.