Sole trader paying wife

sultan123

Can anyone tell me max a sole trader can pay his wife for helping with weekly work for business. What is the max in a tax year? Wife has no other work and is unemployed so this would be only income

Grumpy_chap

sultan123 said:

Can anyone tell me max a sole trader can pay his wife for helping with weekly work for business. What is the max in a tax year? Wife has no other work and is unemployed so this would be only income

What is the nature of the work that the wife is doing for the business?
How many hours work per week will the wife be doing for the business?
What is the market rate for that type and volume of work?

If the payment is fair rate for actual work done, then there should be no risk of valid challenges.

If there is no work, and the payment is simply to avoid tax liabilities, then the maximum that can be paid is nil unless you are willing to risk a challenge and investigation from HMRC.

sultan123

Do they need to sign a P46

Jeremy535897

Grumpy_chap said:

sultan123 said:

Can anyone tell me max a sole trader can pay his wife for helping with weekly work for business. What is the max in a tax year? Wife has no other work and is unemployed so this would be only income

What is the nature of the work that the wife is doing for the business?
How many hours work per week will the wife be doing for the business?
What is the market rate for that type and volume of work?

If the payment is fair rate for actual work done, then there should be no risk of valid challenges.

If there is no work, and the payment is simply to avoid tax liabilities, then the maximum that can be paid is nil unless you are willing to risk a challenge and investigation from HMRC.

Assuming that you live together, the national minimum wage regulations do not apply, but you must operate a payroll unless she is the sole employee and paid no more than £120 a week.

sultan123

Jeremy535897 said:

Grumpy_chap said:

sultan123 said:

Can anyone tell me max a sole trader can pay his wife for helping with weekly work for business. What is the max in a tax year? Wife has no other work and is unemployed so this would be only income

What is the nature of the work that the wife is doing for the business?
How many hours work per week will the wife be doing for the business?
What is the market rate for that type and volume of work?

If the payment is fair rate for actual work done, then there should be no risk of valid challenges.

If there is no work, and the payment is simply to avoid tax liabilities, then the maximum that can be paid is nil unless you are willing to risk a challenge and investigation from HMRC.

Assuming that you live together, the national minimum wage regulations do not apply, but you must operate a payroll unless she is the sole employee and paid no more than £120 a week.

Is p46 required or any paperwork 

Dazed_and_C0nfused

sultan123 said:

Do they need to sign a P46

The P46 was abolished nearly 10 years, replaced by the starter checklist.

You should get her to complete one however if she signe statement A and you are paying her less than £120 and you have no other employees you won't need to register for a PAYE scheme with HMRC.

I presume you realise that despite working she won't be accruing a qualifying year for State Pension.

sultan123

Dazed_and_C0nfused said:

sultan123 said:

Do they need to sign a P46

The P46 was abolished nearly 10 years, replaced by the starter checklist.

You should get her to complete one however if she signe statement A and you are paying her less than £120 and you have no other employees you won't need to register for a PAYE scheme with HMRC.

I presume you realise that despite working she won't be accruing a qualifying year for State Pension.

Sorry what is statememt A and where is this form?

Dazed_and_C0nfused

sultan123 said:

Dazed_and_C0nfused said:

sultan123 said:

Do they need to sign a P46

The P46 was abolished nearly 10 years, replaced by the starter checklist.

You should get her to complete one however if she signe statement A and you are paying her less than £120 and you have no other employees you won't need to register for a PAYE scheme with HMRC.

I presume you realise that despite working she won't be accruing a qualifying year for State Pension.

Sorry what is statememt A and where is this form?

https://www.gov.uk/government/publications/paye-starter-checklist

[Deleted User]

Here: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/963434/Starter-checklist_English_2021_2022.pdf

Grumpy_chap

Is the OP definitely sole-trader and not Ltd Co or via Umbrella Company?  
A couple of months ago the OP was assessing the pros and cons of alternative PAYE opportunities.
If the OP is not a sole-trader, it will make a difference to the applicable rules for employing a spouse.

sultan123

Dazed_and_C0nfused said:

sultan123 said:

Dazed_and_C0nfused said:

sultan123 said:

Do they need to sign a P46

The P46 was abolished nearly 10 years, replaced by the starter checklist.

You should get her to complete one however if she signe statement A and you are paying her less than £120 and you have no other employees you won't need to register for a PAYE scheme with HMRC.

I presume you realise that despite working she won't be accruing a qualifying year for State Pension.

Sorry what is statememt A and where is this form?

https://www.gov.uk/government/publications/paye-starter-checklist

Thanks there is a online and printable one which is to be used. I am guessing I keep this for my own reference as opposed to send it off anywhere?