Could my wife provide us services on a self employed basis and put all her earnings into a pension

comeandgo

Marcon said:

shinytop said:

Silvertabby said:

Can't be that simple.  Otherwise, those of us who retired early and need to pay voluntary Class 3 NI contributions to top up our State pensions could claim to be 'self employed housekeepers' - and pay Class 2.

I agree, but it seems that you can do the same thing by setting up a small business, for example, selling a few bits of tat on eBay.  You would be a 'self employed home based retailer'. 

That's completely different - and if you are only selling a few bits of tat you're unlikely to exceed the £1,000 profit you're allowed to 'earn' before tax etc kick in.

But you don't want tax to kick in.  You just want to be self employed to pay the reduced voluntary NI to increase your state pension.

michaels

So if instead of employing my wife she sells me my groceries at a huge markup making £150 profit a week then that should count as a real employment and thus her real profit would count as self employed income could be put into a pension?

GunJack

Oh come on michaels, you're already using pretty much every loophole available without trying to create more :rotfl:

where's the darn laughing smiley when you need it!!

michaels

GunJack said:

Oh come on michaels, you're already using pretty much every loophole available without trying to create more :rotfl:

where's the darn laughing smiley when you need it!!

Just trying to follow the rules - why would the revenue set rules if they didn't want us to follow them?

shinytop

Marcon said:

shinytop said:

Silvertabby said:

Can't be that simple.  Otherwise, those of us who retired early and need to pay voluntary Class 3 NI contributions to top up our State pensions could claim to be 'self employed housekeepers' - and pay Class 2.

I agree, but it seems that you can do the same thing by setting up a small business, for example, selling a few bits of tat on eBay.  You would be a 'self employed home based retailer'. 

That's completely different - and if you are only selling a few bits of tat you're unlikely to exceed the £1,000 profit you're allowed to 'earn' before tax etc kick in.

Yes it's different from the OP's question, which was about a contrived way to make additional pension contributions and get the associated tax breaks.  My example was a contrived way to be able to pay voluntary Class 2 NICs.  Personally I wouldn't do either.

michaels

shinytop said:

Marcon said:

shinytop said:

Silvertabby said:

Can't be that simple.  Otherwise, those of us who retired early and need to pay voluntary Class 3 NI contributions to top up our State pensions could claim to be 'self employed housekeepers' - and pay Class 2.

I agree, but it seems that you can do the same thing by setting up a small business, for example, selling a few bits of tat on eBay.  You would be a 'self employed home based retailer'. 

That's completely different - and if you are only selling a few bits of tat you're unlikely to exceed the £1,000 profit you're allowed to 'earn' before tax etc kick in.

Yes it's different from the OP's question, which was about a contrived way to make additional pension contributions and get the associated tax breaks.  My example was a contrived way to be able to pay voluntary Class 2 NICs.  Personally I wouldn't do either.

If my wife were working full time as a cleaner she would have an income she could put into a pension I would have to pay someone to clean the house.  However if she was the person employed to clean the house then it suddenly stops being an employment.  Logically to me if you are paid to clean, it is still the same job wherever you are doing it but apparently the tax office don't see it that way.  Hence the suggestions such as she is paid to clean someone else's house and they are employed to clean our house - apart from the extra co2 for more journeys I can't see how that is a different scenario.

zagfles

michaels said:

shinytop said:

Marcon said:

shinytop said:

Silvertabby said:

Can't be that simple.  Otherwise, those of us who retired early and need to pay voluntary Class 3 NI contributions to top up our State pensions could claim to be 'self employed housekeepers' - and pay Class 2.

I agree, but it seems that you can do the same thing by setting up a small business, for example, selling a few bits of tat on eBay.  You would be a 'self employed home based retailer'. 

That's completely different - and if you are only selling a few bits of tat you're unlikely to exceed the £1,000 profit you're allowed to 'earn' before tax etc kick in.

Yes it's different from the OP's question, which was about a contrived way to make additional pension contributions and get the associated tax breaks.  My example was a contrived way to be able to pay voluntary Class 2 NICs.  Personally I wouldn't do either.

If my wife were working full time as a cleaner she would have an income she could put into a pension I would have to pay someone to clean the house.  However if she was the person employed to clean the house then it suddenly stops being an employment.  Logically to me if you are paid to clean, it is still the same job wherever you are doing it but apparently the tax office don't see it that way.  Hence the suggestions such as she is paid to clean someone else's house and they are employed to clean our house - apart from the extra co2 for more journeys I can't see how that is a different scenario.

Same goes for a lot of stuff, like childcare, if your wife became a registered childminder and looked after someone else's kids and another childminder looked after yours, she'd get employment income and you'd be able to claim childcare tax credits/tax breaks and you'd likely be better off. But govt policy for the last few decades has been to screw families who choose to look after their own kids or house because that's not "real" work like looking after someone else's.

DeepSporran

michaels said:

...
Could she then put all her annual earnings (about £8k) into a pension and receive tax relief of 2K on top?
...

If your wife is only 'earning' £8000 she will not be paying any income tax, so there is nothing to apply tax relief to - so no £2000 to add onto her contribution. The concession where any low earner can get £720 added to a £2880 contribution still applies though, but I believe you are already taking advantage of that.

Dazed_and_C0nfused

DeepSporran said:

michaels said:

...
Could she then put all her annual earnings (about £8k) into a pension and receive tax relief of 2K on top?
...

If your wife is only 'earning' £8000 she will not be paying any income tax, so there is nothing to apply tax relief to - so no £2000 to add onto her contribution. The concession where any low earner can get £720 added to a £2880 contribution still applies though, but I believe you are already taking advantage of that.

If the wife was genuinely self employed making £8k profit she could contribute £6,400 to a relief at source pension scheme such as a personal pension or SIPP and the pension company, courtesy of HMRC, would add basic rate tax relief of £1,600 making a fund of £8,000.

The fact that the wife would be paying zero tax and c£150-160 Class 2 National Insurance doesn't stop her receiving the basic rate tax relief.

michaels

DeepSporran said:

michaels said:

...
Could she then put all her annual earnings (about £8k) into a pension and receive tax relief of 2K on top?
...

If your wife is only 'earning' £8000 she will not be paying any income tax, so there is nothing to apply tax relief to - so no £2000 to add onto her contribution. The concession where any low earner can get £720 added to a £2880 contribution still applies though, but I believe you are already taking advantage of that.

You don't have to have paid the tax to get the pension uplift, subject to the annual allowance, anyone can pay all of their income into a pension and it will all get the relief uplift, even the bit that was paid tax free from the personal allowance.