My DW wants to start a self employed ironing business. Can I be her customer?

michaels

MY DW is thinking of starting an ironing business.  Would I be able to send my clothes to her service (at the market rate) so I don't have to iron them myself or would this break any tax rules?

[Deleted User]

Why on earth would you do this? You give her, say, £20 to do your ironing- you are £20 worse off. 
She receives £20 and pays tax (possibly NIC on this). 
Have you thought of an advantage?

michaels

purdyoaten2 said:

Why on earth would you do this? You give her, say, £20 to do your ironing- you are £20 worse off. 
She receives £20 and pays tax (possibly NIC on this). 
Have you thought of an advantage?

Yes, she won't earn enough to pay tax and the cost of the ironing stays in our house rather than going to a stranger.

InMyDreams

Is there more to this than you just wanting to ‘pay’ your wife? Are you hoping to claim this back from someone else or demonstrate that your wife’s earnings are higher than they are? Because otherwise I can’t see any advantage to you either. You are perfectly free to give your wife £20 or £200 or any amount, completely tax free, whether she does your ironing or not. And she is perfectly free to do your ironing whether you give her £20 or not. To formally work through or charge through a business seems an extreme level of formality between spouses to do a bit of ironing.

comeandgo

I imagine it is to give wife a self employed status and therefore be able to pay reduced NI rates to gain extra years for short years in gaining her state pension.  Can she not do other family members ironing?  I don't think she can do yours or any family member living at same address.

Jeremy535897

comeandgo said:

I imagine it is to give wife a self employed status and therefore be able to pay reduced NI rates to gain extra years for short years in gaining her state pension.  Can she not do other family members ironing?  I don't think she can do yours or any family member living at same address.

She can do their ironing. The question is whether she can treat a charge for doing their ironing as a business receipt. If the purpose of setting up the ironing business is to be able to pay voluntary class 2 NIC, it has to stand up to scrutiny. If all the receipts come from family members for whom she has previously ironed without charge, it looks very weak. If there are customers outside the family, and the rate charged can deliver a profit, she doesn't need to make family customers pay as well, unless she wants to.

Grumpy_chap

Is this question somehow different from the OP's recent thread?
https://forums.moneysavingexpert.com/discussion/6165277/could-my-wife-provide-us-services-on-a-self-employed-basis-and-put-all-her-earnings-into-a-pension#latest
Ask a question, don't get the answer I want so ask the same question again.
I can't see how paying your wife for "services" in the home would be determined as anything other than GAAR.

OP's wife can, of course, set up an ironing business and earn revenue from outside the family unit.  That does not apply to all of the "services" that the OP may hope to gain from within his wife the family unit.

michaels

Grumpy_chap said:

Is this question somehow different from the OP's recent thread?
https://forums.moneysavingexpert.com/discussion/6165277/could-my-wife-provide-us-services-on-a-self-employed-basis-and-put-all-her-earnings-into-a-pension#latest
Ask a question, don't get the answer I want so ask the same question again.
I can't see how paying your wife for "services" in the home would be determined as anything other than GAAR.

OP's wife can, of course, set up an ironing business and earn revenue from outside the family unit.  That does not apply to all of the "services" that the OP may hope to gain from within his wife the family unit.

It is the same question I just wondered whether it was more pertinent to a thread on taxation than one on pensions?  Perhaps all the same posters frequent both threads so there is no point asking in both places - but this is not necessarily the case.

MalMonroe

I hate ironing! And so I don't do any. But anyone setting up their own business should register with HMRC as self-employed, whether or not they will earn enough to pay income tax because every self-employed person has to submit a tax return every 12 months. And also pay National Insurance. I've just started my own business and have registered with HMRC but I'm not eligible to pay NI because I'm of pension age. Right now, even with pension, I don't even earn enough to pay tax but hopefully I will in the future and I've submitted a tax return to the effect that I've not earned enough to pay tax yet. Whether or not that seems weird or strange, at least I know I'm following the law! 

So, if you want to hire your own wife to iron your clothes, that's up to you. But it's part of her income that she'll have to declare in her tax return. Whether or not she makes a profit. I don't understand you (frankly quite controlling-sounding) saying "the cost of the ironing stays in our house rather than going to a stranger" - when that is exactly what a business is! Doing work for 'strangers'. But regular customers won't be strangers for long, eh? 

Pennywise

If she wasn't ironing for anyone else, highly unlikely she'd get away with being officially classed as self employed.  Self employment means being in business, which she isn't if you are her only client.

Grumpy_chap

There is already a mechanism for transferring tax allowances between married couples - Marriage Allowance - and beyond that, the OP seems intelligent and therefore fully aware of the absurdity of the idea.

Either OP's DW wants to start a home services business, in which case, get external customers and bring additional revenue into the joint household finances, which can then be properly managed as sole trader self-employed business.  All very sensible and works.  Still not sensible for OP to buy the shirt ironing service from the new business as he is spending part of their joint finances to lose deductions of tax and the costs of operating the business (insurance, equipment, etc) and then get back the residual into the joint finances.

Or, OP's DW plans to only "sell" her "services" to the OP.  In this case, IR35 may well apply making the OP effectively the employer of OP's DW.  If the scheme goes stale further down the line, OP's DW may have a claim against the OP for unfair dismissal or redundancy.  How will the OP manage this if the new business, which is now the OP's business, has provided an iron and then he finds out that OP's DW is using the iron 'on the side' to iron her blouses (private use) in addition to ironing his shirts (business use).  Will that be a disciplinary matter?