New Limited Company - what benefits can I utilise?

Bookworm105

silvercar said:

Bookworm105 said:

silvercar said:

Directors could be employed, and often are at a level to qualify for state pension without incurring any tax for them or the company. Especially useful if one of the directors is not earning elsewhere. If the 18 yr old is a student and not earning (much) elsewhere, there is an opportunity to employ them on menial tasks during holiday times, in order to take advantage of the tax regime as well as supplementing their income.

as long as minimum wage hourly rate is observed.

also, given "menial work", the rate of pay should be commensurate with the complexity of the task.
In contrast, employing family and paying them extortionate rates is "problematic".

The situation is subtly different for directors (not other employees) as they fall outside minimum wage rules hence the many instances of payment of "director's minimum" to get pension credit without having to pay any tax under PAYE rules on those earnings.

Grumpy_chap said:

silvercar said:

Directors could be employed, and often are at a level to qualify for state pension without incurring any tax for them or the company. Especially useful if one of the directors is not earning elsewhere. If the 18 yr old is a student and not earning (much) elsewhere, there is an opportunity to employ them on menial tasks during holiday times, in order to take advantage of the tax regime as well as supplementing their income.

I thought the OP's children were Shareholders but not Directors of the OP's Ltd Co.

The OPs children are shareholder. I was suggesting employing them on menial tasks would make them employees and therefore eligible for the trivial benefits which need no explanation, as well as potentially a seasonal party.

and i was simply pointing out which category of employee needs to adhere to minimum wage law.

Hoenir

silvercar said:

Bookworm105 said:

silvercar said:

Directors could be employed, and often are at a level to qualify for state pension without incurring any tax for them or the company. Especially useful if one of the directors is not earning elsewhere. If the 18 yr old is a student and not earning (much) elsewhere, there is an opportunity to employ them on menial tasks during holiday times, in order to take advantage of the tax regime as well as supplementing their income.

as long as minimum wage hourly rate is observed.

also, given "menial work", the rate of pay should be commensurate with the complexity of the task.
In contrast, employing family and paying them extortionate rates is "problematic".

The situation is subtly different for directors (not other employees) as they fall outside minimum wage rules hence the many instances of payment of "director's minimum" to get pension credit without having to pay any tax under PAYE rules on those earnings.

Grumpy_chap said:

silvercar said:

Directors could be employed, and often are at a level to qualify for state pension without incurring any tax for them or the company. Especially useful if one of the directors is not earning elsewhere. If the 18 yr old is a student and not earning (much) elsewhere, there is an opportunity to employ them on menial tasks during holiday times, in order to take advantage of the tax regime as well as supplementing their income.

I thought the OP's children were Shareholders but not Directors of the OP's Ltd Co.

The OPs children are shareholder. I was suggesting employing them on menial tasks would make them employees and therefore eligible for the trivial benefits which need no explanation, as well as potentially a seasonal party.

The HMRC may well question the remuneration paid and the nature of the duties undertaken. Employing family to mitigate tax liabilities is as old as the hills.  

terryhouse

Hi,

Yes my children are shareholders, not Directors.  So they have helped out with refurbing the properties, so if minimum wage was paid, would they be classed as employees or contractors which did a piece of work for us? To have official employees on the books, does that mean we would have to do payroll, NI, etc?

Hoenir

terryhouse said:

To have official employees on the books, does that mean we would have to do payroll, NI, etc?

Yes it would. No cash in hand employment. 

Bookworm105

terryhouse said:

Hi,

Yes my children are shareholders, not Directors.  So they have helped out with refurbing the properties, so if minimum wage was paid, would they be classed as employees or contractors which did a piece of work for us? To have official employees on the books, does that mean we would have to do payroll, NI, etc?

how much work have you done for the PLCs you have shares in without expecting to be paid?

if your children do work for the company then they are doing so as workers, not shareholders.

Whether they are contractors (ie self employed with all that entails in terms of their personal tax situation) or employees comes down to your company formally assessing their status under employment legalisation (liability for getting it wrong rests with the company, not the individual)
Employment status: Self-employed and contractor - GOV.UK

if assessed to be an employee then obviously (age related) minimum wage legalisation applies in full

whether the company has to operate PAYE via a payroll depends on the total amount paid to its employee(s) per week (month)
PAYE and payroll for employers: Introduction to PAYE - GOV.UK

silvercar

terryhouse said:

Hi,

Yes my children are shareholders, not Directors.  So they have helped out with refurbing the properties, so if minimum wage was paid, would they be classed as employees or contractors which did a piece of work for us? To have official employees on the books, does that mean we would have to do payroll, NI, etc?

Yes. Hmrc has a basic paye app that you can download. It’s quite easy to use. You can then add the children as employees and mark them as ad hoc workers. If they are under the thresholds for income tax and NI, you just submit the return online without needing to send any tax.

Grumpy_chap

terryhouse said:

Hi,

Yes my children are shareholders, not Directors.  So they have helped out with refurbing the properties, so if minimum wage was paid, would they be classed as employees or contractors which did a piece of work for us? To have official employees on the books, does that mean we would have to do payroll, NI, etc?

Is minimum wage the appropriate market rate for the work undertaken?
The Ltd Co. should not be taking advantage of any individuals with below market rate costs.

The children have done the work so need to be paid for that time at the appropriate rate.  That means either as employees, which will require payroll, NI, tax, etc.  Alternatively as self-employed sole-trader contractors, for whom the hourly rate would be higher and then the children need to register as sole-traders and keep their own records and prepare tax returns etc.

Shareholders do not work for a company for free.  Nor can they waive income as a Director can.