Register as an employer to save money

skintandsad

With tax going digital, I’ve been looking into different systems that  I can use to make life easier and that offer me the best options.
Whilst doing research, I have come to the following conclusion;

* hubby could register as an employer, and could pay me £1000 per month. 
* He could claim Employer Allowance so that he wouldn’t have to pay any employer NI contributions.
* I would also not have to pay any tax or NI contributions, but would be treated (for state pension purposes) as if I had.

In my mind, this would have two benefits: 
1) to provide me with the extra years I need for full state pension
2) reduce further hubby’s tax liability.

We could also then set up a company pension scheme which could offer further tax benefits.

Can you please confirm if my findings are accurate and if you foresee any negatives?  Or have I got this completely wrong?  I’m not good at this stuff 🤣

CURRENT SITUATION:
Hubby is a CIS registered construction worker, self employed and not a LTD company and it’s only me employed by hubby to do his books but I only earn £112 per week to keep things simple,  although I do many more hours than I am paid for.  He is not currently registered as an employer. 

Any thoughts, insights or advice is most gratefully received.
Thank you ☺️ 

Grumpy_chap

There are restrictions on the Employment Allowance in the case of a Ltd Co and only the owner / Director plus one family member employee.  There were some threads on that after the October 2024 Budget.
Any employment of a family member has to be demonstrably for the genuine need of the business and market rate.
If your husband is not registered as an employer, how are you being paid the current £112 per week?  Are you registered as Sole Trader?

Isthisforreal99

If you think HMRC will accept a CIS sub-contractor paying their Mrs £12k a year for some admin then you are deluded.

skintandsad

Grumpy_chap said:

There are restrictions on the Employment Allowance in the case of a Ltd Co and only the owner / Director plus one family member employee.  There were some threads on that after the October 2024 Budget.
Any employment of a family member has to be demonstrably for the genuine need of the business and market rate.
If your husband is not registered as an employer, how are you being paid the current £112 per week?  Are you registered as Sole Trader?

He is a sole trader, not a Ltd company.  The accountant said I could draw £112 without registering, although I am worth much more 🙃
I gave up paid employment as a directors PA 10 years ago (was then on £15 p/h) to help hubby build his business.  I source work, hotels (he works away), materials, do invoicing, keep paperwork, organise his diary, ensure his training is up to date, book vehicle servicing etc.
I am not registered as self employed and I do not earn enough to pay tax or NI at the moment.

Grumpy_chap

skintandsad said:

He is a sole trader, not a Ltd company. 

Yes, I understood that.  But then you went on to comment about several points as a company so I understood the proposal was to change from Sole Trader to Ltd Co.
I understand that the constraints on paying a spouse that I referred to above in respect to Employment Allowance also apply for Sole Trader.

skintandsad said:

I only earn £112 per week 

skintandsad said:

The accountant said I could draw £112 without registering
I am not registered as self employed

On what basis did the Accountant determine you did not need to register as self employed?
£112 per week is £5.8k per year.  Far in excess of the threshold for registering:

https://www.gov.uk/become-sole-trader/register-sole-trader

You must register as a sole trader if you:

• earn more than £1,000 in a tax year (from 6 April to 5 April)

mybestattempt

skintandsad said

He is a sole trader, not a Ltd company.  The accountant said I could draw £112 without registering, although I am worth much more 🙃
I gave up paid employment as a directors PA 10 years ago (was then on £15 p/h) to help hubby build his business.  I source work, hotels (he works away), materials, do invoicing, keep paperwork, organise his diary, ensure his training is up to date, book vehicle servicing etc.
I am not registered as self employed and I do not earn enough to pay tax or NI at the moment.

The test isn't what you think you're worth.

It's whether HMRC, after a detailed review, would accept the work you do justifies you being paid £1000 a month.

You need to be realistic, although you may undertake a number of tasks, given the nature and frequency of each them over the course of a year would your husband pay someone else £12000pa to do them for him?

skintandsad

Grumpy_chap said:

skintandsad said:

He is a sole trader, not a Ltd company. 

Yes, I understood that.  But then you went on to comment about several points as a company so I understood the proposal was to change from Sole Trader to Ltd Co.
I understand that the constraints on paying a spouse that I referred to above in respect to Employment Allowance also apply for Sole Trader.

skintandsad said:

I only earn £112 per week 

skintandsad said:

The accountant said I could draw £112 without registering
I am not registered as self employed

On what basis did the Accountant determine you did not need to register as self employed?
£112 per week is £5.8k per year.  Far in excess of the threshold for registering:

https://www.gov.uk/become-sole-trader/register-sole-trader

You must register as a sole trader if you:

• earn more than £1,000 in a tax year (from 6 April to 5 April)

1) hubby will stay as sole trader
2) he pays me a small wage to do his books and other stuff.  He is not registered as an employer as I earn only a small wage, although he does employ me so I’m not self employed.  I earn below the amount needed for Ni (employer/ee) and tax

Am I doing this wrong?  It’s never been raised as an issue by HMRC or the accountant?

mybestattempt

Grumpy_chap said:

skintandsad said:

He is a sole trader, not a Ltd company. 

Yes, I understood that.  But then you went on to comment about several points as a company so I understood the proposal was to change from Sole Trader to Ltd Co.
I understand that the constraints on paying a spouse that I referred to above in respect to Employment Allowance also apply for Sole Trader.

skintandsad said:

I only earn £112 per week 

skintandsad said:

The accountant said I could draw £112 without registering
I am not registered as self employed

On what basis did the Accountant determine you did not need to register as self employed?
£112 per week is £5.8k per year.  Far in excess of the threshold for registering:

https://www.gov.uk/become-sole-trader/register-sole-trader

You must register as a sole trader if you:

• earn more than £1,000 in a tax year (from 6 April to 5 April)

I think the husband, the accountant and indeed the OP herself regard the OP as an employee of her husband's (sole trader) business.

Dead_keen

skintandsad said:

With tax going digital, I’ve been looking into different systems that  I can use to make life easier and that offer me the best options.
Whilst doing research, I have come to the following conclusion;

* hubby could register as an employer, and could pay me £1000 per month. 
* He could claim Employer Allowance so that he wouldn’t have to pay any employer NI contributions.
* I would also not have to pay any tax or NI contributions, but would be treated (for state pension purposes) as if I had.

In my mind, this would have two benefits: 
1) to provide me with the extra years I need for full state pension
2) reduce further hubby’s tax liability.

We could also then set up a company pension scheme which could offer further tax benefits.

Can you please confirm if my findings are accurate and if you foresee any negatives?  Or have I got this completely wrong?  I’m not good at this stuff 🤣

CURRENT SITUATION:
Hubby is a CIS registered construction worker, self employed and not a LTD company and it’s only me employed by hubby to do his books but I only earn £112 per week to keep things simple,  although I do many more hours than I am paid for.  He is not currently registered as an employer. 

Any thoughts, insights or advice is most gratefully received.
Thank you ☺️ 

If you are paid £112 per week then your hubby needs to register for PAYE anyway - https://www.gov.uk/paye-for-employers.

skintandsad

I think the husband, the accountant and indeed the OP herself regard the OP as an employee of her husband's (sole trader) business.

That is correct.  I seem not to be explaining myself very well!  I apologise.

Grumpy_chap

skintandsad said:

I think the husband, the accountant and indeed the OP herself regard the OP as an employee of her husband's (sole trader) business.

That is correct.  I seem not to be explaining myself very well!  I apologise.

In which case, the business needs to run payroll for your weekly wage and your appropriate NI and income tax will be declared to HMRC, even if that all totals to zero, it has still been declared via the payroll.