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

InMyDreams

michaels said:

MovingForwards said:

Wonder what 'service' he will want to pay her for next.

We did all those jokes in the other thread already

Still seems strange to me that currently my shirts go to an ironing service and that counts as taxable economic activity but if I paid my DW to do them instead it counts as nothing.

Because your family’s ironing is already your family’s responsibility. Just like looking after your own children, cooking your own meals or cleaning your own house. Contracting those responsibilities out to ‘outsiders’ is what makes it an economic activity. Paying each other for ‘household’ responsibilities makes no more sense than paying yourself from one bank account into another and counting that as ‘income’.

michaels

Grumpy_chap said:

michaels said:

But she can start an ironing business and iron my neighbours shirts and my neighbours husband can iron my shirts and it is all a business... What if she employed a Deliveroo driver to collect the shirts from the house and deliver them to her business premises in the front room?

Yes, all those things are possible.  Does your neighbour's husband want to iron your shirts?
This is also going to result in a nett outflow of money from your combined income / assets:

• Your wife will need to pay tax and NI on the money she is paid by you to iron her shirts
• You need to pat the Deliveroo fees
• You need to cover the cost of the Accountant to manage your wife's business accounts
• Your wife needs to open and pay fees for a business bank acocunt
• Your wife needs to carry business insurances and cover liablities
• Etc.

There is a mechanism in the tax system for transferring tax benefits between partners - it is called "Marriage Allowance" and if you don't qualify, then unfortunately no amount of "buying service" between each other is going to give you the nett benefit your hope for.  If you were unfortunate enough to fall on bad times, the fact your wife now has an income would be considered as part of your joint assessment for UC, so you could do yourself out of that as well.  Obviously, you hope you will never need to claim UC, but none of us ever know what is around the corner.


This is an advice forum and, in two threads, you have been given the same advice that the scheme will not fly.  If you remain unhappy with the answer, you could ask the same question in yet another thread.  Maybe try the "I have a flawed idea but want to be assured it is great, so please don't dis me" forum.  Or Mumsnet.

What have you got against mum's net?
Apologies for asking a tax question on the pension board first and then thinking it might be better on the tax board.  
There is no tax or ni liability if she earns below the thresholds.  
The married tax allowance is already used.  
There is no attempt to increase hours to qualify for higher uc/tax credits.  
I am not trying to reduce my income to pay less tax by pretending my wife is my employee.  
We have savings that mean we will never qualify for UC.

There is only a desire to equalise pension provision that the current rules do not seem to permit and a lack of understanding why spouses are not allowed to make financial transactions that strangers can enter into.  
(Note the question is the why; I fully understand the rules but just can't see the logical reason for them).

InMyDreams

michaels said:

There is only a desire to equalise pension provision that the current rules do not seem to permit and a lack of understanding why spouses are not allowed to make financial transactions that strangers can enter into.  
(Note the question is the why; I fully understand the rules but just can't see the logical reason for them).

Because you can’t make a financial transaction between yourself and yourself. And money can flow freely between spouses (in a way that it can’t between strangers or even friends) so that would render any other ‘financial transactions’ between spouses as somewhat meaningless. But you can also use this to your advantage in mitigating other taxes.

prowla

So, she is thinking of starting a business.

If, say, her business was selling cars; would it be wrong if she gave you a car from the business for nothing?

Instead her business is ironing; now is it wrong if she charges you for the service?

I suppose it depends whether it's a genuine business with multiple paying customers.

xylophone

Does your wife use her ISA allowance?
Perhaps you could gift her the £8000 a year to invest in a stocks and shares ISA - no tax relief going in but tax free income on the way out.

sheramber

How may people is she going to iron for?
She can only pay into a pension up to 100% of her earnings so she will need to  earn over £3600 to contribute   more than she can at present   plus the cost of her voluntary class 2 stamp.
Your £20 is not going to go far into that.

Grumpy_chap

I am starting to like the idea of employing my wife for services in the home.  Can my wife also employ me for services?

The thing is, we live in a house down by the green and would really rather have one of the larger houses up the hill with cinema room, swimming pool and tennis courts.  Trouble is, based upon my earned income, the bank will not give me the mortgage.

Now if I take my earned income and then employ my wife as a sole-trader for, say £40k/year, our household income (as per SA302s) has just jumped up.  If my wife then employs me as a sole-trader as well, say £30k/year, another big jump in SA302 declaration.  I can now use my increased earnings to buy more services from my wife and thus, she can buy more from me.  I am sure that we can generate the sufficient turnover to qualify for one of those big mortgages that will allow us to have one of the big houses up the hill.  

What could possibly go wrong?

I fail to see how this idea is any different to the OP's idea, except I have taken it to a greater level with the repeated loops.
I'm off to Foxtons

michaels

Grumpy_chap said:

I am starting to like the idea of employing my wife for services in the home.  Can my wife also employ me for services?

The thing is, we live in a house down by the green and would really rather have one of the larger houses up the hill with cinema room, swimming pool and tennis courts.  Trouble is, based upon my earned income, the bank will not give me the mortgage.

Now if I take my earned income and then employ my wife as a sole-trader for, say £40k/year, our household income (as per SA302s) has just jumped up.  If my wife then employs me as a sole-trader as well, say £30k/year, another big jump in SA302 declaration.  I can now use my increased earnings to buy more services from my wife and thus, she can buy more from me.  I am sure that we can generate the sufficient turnover to qualify for one of those big mortgages that will allow us to have one of the big houses up the hill.  

What could possibly go wrong?

I fail to see how this idea is any different to the OP's idea, except I have taken it to a greater level with the repeated loops.
I'm off to Foxtons

But when the bank asked you to fill in the section on the application form about normal expenditure this would include the money spent on employing your DW so your disposable income would be the same?

Jeremy535897

michaels said:

Grumpy_chap said:

I am starting to like the idea of employing my wife for services in the home.  Can my wife also employ me for services?

The thing is, we live in a house down by the green and would really rather have one of the larger houses up the hill with cinema room, swimming pool and tennis courts.  Trouble is, based upon my earned income, the bank will not give me the mortgage.

Now if I take my earned income and then employ my wife as a sole-trader for, say £40k/year, our household income (as per SA302s) has just jumped up.  If my wife then employs me as a sole-trader as well, say £30k/year, another big jump in SA302 declaration.  I can now use my increased earnings to buy more services from my wife and thus, she can buy more from me.  I am sure that we can generate the sufficient turnover to qualify for one of those big mortgages that will allow us to have one of the big houses up the hill.  

What could possibly go wrong?

I fail to see how this idea is any different to the OP's idea, except I have taken it to a greater level with the repeated loops.
I'm off to Foxtons

But when the bank asked you to fill in the section on the application form about normal expenditure this would include the money spent on employing your DW so your disposable income would be the same?

Not sure how the PAYE and NIC on all that income would be paid?

phillw

michaels said:
But when the bank asked you to fill in the section on the application form about normal expenditure this would include the money spent on employing your DW so your disposable income would be the same?

What part of that sounded like normal expenditure? ;-)
It sounds like the opposite of tax evasion. HMRC will be happy to take the extra funds.