HMRC RULES FOR SELF EMPLOYED

Jogtdevon

HI all, my husband is a self employed painter and decorator. We got married last year and I have been typing and sending his quotes and invoices.
I've kept a spreadsheet of the work I've done but we don't know if I bill him for my time if it's a tax deductable expense? I currently am employed but will be taking ill health retirement soon. Not much money is involved,  it's only £160 for the first quarter. 
Thanks 
Jo

DullGreyGuy

Jogtdevon said:

HI all, my husband is a self employed painter and decorator. We got married last year and I have been typing and sending his quotes and invoices.
I've kept a spreadsheet of the work I've done but we don't know if I bill him for my time if it's a tax deductable expense? I currently am employed but will be taking ill health retirement soon. Not much money is involved,  it's only £160 for the first quarter. 
Thanks 
Jo

On what basis are you doing this? Self employed? His employee?

In principle it would be a legitimate business cost for him but then you need to declare the earnings so if you are both 20% tax payers it's just moving the tax liability. 

These types of arrangements have previously been known to be a bit of a red flag to HMRC and so may increase the chances of someone looking into the arrangement and consider if it's real or a tax dodge. They could say you are an employee in which case as you have another job he should have registered for PAYE and potentially trigger other employer based activities like EL insurance. 

Undoubtedly many do it without issues, just better you know the potential risks and fines if HMRC do decide to look.

MattMattMattUK

Jogtdevon said:

HI all, my husband is a self employed painter and decorator. We got married last year and I have been typing and sending his quotes and invoices.
I've kept a spreadsheet of the work I've done but we don't know if I bill him for my time if it's a tax deductable expense?

He should really pay you via PAYE, although he could pay you the money via bank transfer and yes it would be an allowable expense for his self assessment, it would be added to his total allowable costs. If he pays you via bank transfer then you need to be invoicing him as a self employed book keeper and you will then need to complete a tax return.

Jogtdevon said:

I currently am employed but will be taking ill health retirement soon. Not much money is involved,  it's only £160 for the first quarter. 
Thanks 
Jo

Does your husband have an accountant? It may be worth doing a bit of tax planning with them if he does.

FlorayG

I suggest you consider yourself self-employed ( you can do this in addition to being employed) and then you have a possible earner doing the same job for other small businessmen if you want to after your give up your employment. Then you invoice your husband for work you do for him

DullGreyGuy

FlorayG said:

I suggest you consider yourself self-employed ( you can do this in addition to being employed) and then you have a possible earner doing the same job for other small businessmen if you want to after your give up your employment. Then you invoice your husband for work you do for him

Safer to take the HMRC test on if you are employee or self employed. https://www.gov.uk/guidance/check-employment-status-for-tax

MattMattMattUK

DullGreyGuy said:

FlorayG said:

I suggest you consider yourself self-employed ( you can do this in addition to being employed) and then you have a possible earner doing the same job for other small businessmen if you want to after your give up your employment. Then you invoice your husband for work you do for him

Safer to take the HMRC test on if you are employee or self employed. https://www.gov.uk/guidance/check-employment-status-for-tax

I agree. I would also say that if the OP is giving up regular employment then there could be benefits of being PAYE for the husband from NI credits for state pension. It may also be worth looking at him becoming a Ltd, both having an element of PAYE and then being able to claim the employment allowance. I think it is very much time for them to have a chat with an accountant. 

SVaz

He can employ you once you’ve retired and pay you under the LeL threshold - then he doesn’t  need to register as an employer and can simply put your pay as an expense.  That’s what i used to do with my Wife.   I’d stay under £5k as that’s the new employer NI threshold. 

If he does it now while you are employed then he would have to register as an 
 employer and with the pensions regulator for auto enrolment -plus run payroll - which is now what I do with my wife , I pay her over the Lel and under the primary threshold so she gets NI credited as she’s a couple of years short. 

If he pays you say, £300 a month, that will save him nigh on £1k in tax 😉

Grumpy_chap

Jogtdevon said:

HI all, my husband is a self employed painter and decorator. We got married last year and I have been typing and sending his quotes and invoices.
I've kept a spreadsheet of the work I've done but we don't know if I bill him for my time if it's a tax deductable expense? I currently am employed but will be taking ill health retirement soon. Not much money is involved,  it's only £160 for the first quarter. 
Thanks 
Jo

How have you worked out that £160 for the first quarter?
It seems rather low.
At NMW, that equates to around 13 hours over the quarter, so one hour per week.