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

Jeremy535897

Either the business is a real one or it isn't. To be a real one, there should be several customers, which may include a spouse, although that would be unusual. If the spouse is the sole or main customer, it isn't a real business.

InMyDreams

michaels said:

So are you suggesting I ask her to do it 'cash in hand' to avoid paying tax - now that sounds like evasion to me

No, it’s not at all. Because you are married. And that’s the point. You are completely free to move whatever money you like between spouses, backwards and forwards, for any reason or no reason whatsoever. Paying her to iron your shirts would be no different to paying her to iron her own shirts which would be no different to paying her to sit around all day and do nothing or paying her to go out and work for someone else. You can give her whatever money you like. It’s still not ‘income’. Because you are married.

mrsS_2

I don’t think being married is the issue.  I charge my husband for doing his vat returns and accounts and that’s totally fine because I am a self employed accountant and he is just one of many clients that I deal with.    He would have to pay someone to do it so it might as well be me


its the fact that it’s not a genuine business that is the problem

Grumpy_chap

@mrsS_2 - I am not sure that your scenario is equal to the OP's.

As I understand it, the OP proposes that, from the married joint personal post-tax resources, Mr OP would make a payment to Mrs OP for household chores such that Mrs OP can claim to be a sole-trader and therefore has a fabricated earned income, which will be subject to tax & NI, but also allows Mrs OP to make pension contributions above the £3,600 limit otherwise in place.  Indeed, if Mrs OP had a genuine sole-trader business offering ironing services, then there would be no need for Mr OP to but the services from Mrs OP as Mrs OP would already have the income allowing the pension contributions and there would be no benefit in Mr OP "buying" the services from Mrs OP as that would simply result in depletion of the married joint personal post-tax resources.

Your scenario seems different as you say:

mrsS_2 said:

I charge my husband for doing his vat returns and accounts and that’s totally fine because I am a self employed accountant and he is just one of many clients that I deal with.    He would have to pay someone to do it so it might as well be me

I take from that you operate as a sole-trader self-employed business.
The phrase that you do your husbands "vat returns and accounts" suggests that your husband operates either his own Ltd Co. business or his own sole-trader self-employed business.
So, the payment from your husband's business is a genuine B2B transaction between his operating business and your operating accountancy business.  I am sure that transferring the funds from your husband's business to your business is prudent from a taxation perspective in levelling your positions so you are both in the most favourable tax bands.  

The difference between a husband and wife making business payments between each other when each operate independent business is quite different from the OP's proposal of left hand paying the right hand.  As an Accountant, I am sure you know all this tax difference and I am surprised you added to this thread in support of the OP's position.

InMyDreams

mrsS_2 said:

I don’t think being married is the issue.  I charge my husband for doing his vat returns and accounts and that’s totally fine because I am a self employed accountant and he is just one of many clients that I deal with.    He would have to pay someone to do it so it might as well be me


its the fact that it’s not a genuine business that is the problem

I think even if wife was operating a genuine business it still wouldn’t be OK in OP’s position because of the nature of the work.

If OP’s wife was a professional chef, providing catering to external clients, I still don’t think she could charge OP if she cooked him a meal, even if she didn’t eat it herself. She also can’t call his share of the groceries each week a business expense.

If, say, he asked her business to cater for a function that he was putting on in relation to his own business, then that would be different, even if other spouses without catering businesses might volunteer their time for free.

Its always going to be possible to create debatable scenarios that aren’t so black and white, but I don’t think the OP’s scenario is one of those.

Grumpy_chap

InMyDreams said:

I think even if wife was operating a genuine business it still wouldn’t be OK in OP’s position because of the nature of the work.

If OP's wife was operating a genuine business offering ironing services, it would be pointless for the OP to pay (from taxed personal joint marriage resources) for the service from Mrs OP's business.  The only result then would be to deplete the funds by some taxation and then the residual proportion returns back to the taxed personal joint marriage resources.

The OP's idea is that by creating the contrived business, then Mrs OP can make payments into a pension above the £3,600 that she is permitted if not working.  If Mrs OP already had a genuine business, she could make the pension payments without needing the contrived transactions of Mr OP buying Mrs OP's services.

InMyDreams

@Grumpy_chap I completely agree with you. But even if spouse was earning below tax thresholds, and the situation wasn’t contrived, I still don’t think it would be OK.

Grumpy_chap

Thanks @InMyDreams - I have been saying many times in this thread and the OP's other thread that this is not OK.  You seem to be the first one to agree with me.  I was starting to wonder what I was missing.

michaels

Grumpy_chap said:

@mrsS_2 - I am not sure that your scenario is equal to the OP's.

As I understand it, the OP proposes that, from the married joint personal post-tax resources, Mr OP would make a payment to Mrs OP for household chores such that Mrs OP can claim to be a sole-trader and therefore has a fabricated earned income, which will be subject to tax & NI, but also allows Mrs OP to make pension contributions above the £3,600 limit otherwise in place.  Indeed, if Mrs OP had a genuine sole-trader business offering ironing services, then there would be no need for Mr OP to but the services from Mrs OP as Mrs OP would already have the income allowing the pension contributions and there would be no benefit in Mr OP "buying" the services from Mrs OP as that would simply result in depletion of the married joint personal post-tax resources.

Your scenario seems different as you say:

mrsS_2 said:

I charge my husband for doing his vat returns and accounts and that’s totally fine because I am a self employed accountant and he is just one of many clients that I deal with.    He would have to pay someone to do it so it might as well be me

I take from that you operate as a sole-trader self-employed business.
The phrase that you do your husbands "vat returns and accounts" suggests that your husband operates either his own Ltd Co. business or his own sole-trader self-employed business.
So, the payment from your husband's business is a genuine B2B transaction between his operating business and your operating accountancy business.  I am sure that transferring the funds from your husband's business to your business is prudent from a taxation perspective in levelling your positions so you are both in the most favourable tax bands.  

The difference between a husband and wife making business payments between each other when each operate independent business is quite different from the OP's proposal of left hand paying the right hand.  As an Accountant, I am sure you know all this tax difference and I am surprised you added to this thread in support of the OP's position.

I disagree that the B2B rather than C2B nature of the transaction makes any difference.  Suppose my DW ran her own sandwich shop, I could still go in and buy a sandwich from her shop.

The depletion of joint funds argument is also spurious for two reasons:
1) Many couples retain independent finances
2) Many small self employed businesses have such a small turnover that no tax or NI is payable (note the option to pay voluntary NI in this instance)

The crux of the matter seems to be whether it is a genuine business run for profit with multiple (how many/what proportion of turnover) customers or a construct purely set up to arbitrage tax rules.

Barny1979

Would this be classed as "laundering" money?