Help with cutting sole trader tax

Narva

Hello, hope someone can help us please with some straight forward advise.

My husband works full time and does some contract work. Due to this he pays 40% on his contract work. He was talking to a friend and they said to lower the tax, he could pay me a small wage to do his paperwork( which i do do just not paid ?) etc and i would only pay the lower amount of tax on my wages. Also we are changing our car, and he said we could claim the tax back on it as he would be using it for the contract work. Please can someone help with some advise rather than links to other sites, i have a lot on my plate at the mo, and easily confused!! Any legal way to lower the amount we have to pay 40% tax on would be great. many thanks

Pennywise

Yes, you can be paid for the work you do. To justify it, you need to keep records of the time you spend (i.e. timesheets) and then you can be paid a reasonable open market rate for your time - say something like £7.50 per hour for basic admin work. Your husband will need to set up an employers PAYE scheme with HMRC and pay you properly via a payslip etc - you then have to complete end of year employers PAYE returns etc, so there will be more admin to do!

Re travel, he is best claiming the statutory 40p per mile for the first 10,000 business miles per year and then 25p per mile thereafter, and then you pay for your car privately. It gets very complicated if you claim the full costs of the car as you have to add-back the private use proportions and you have to claim capital allowances on the car purchase. If you havn't got the time to be referred to links, as you say in your post, then you won't have time to work out how to claim capital allowances and then do the private use add-backs.:rolleyes:

One question though, surely you should be asking these questions of your accountant? As a higher rate taxpayer, your husband could be missing loads of tricks - perhaps it's time to get a new accountant if you feel you have to take advice from friends and internet forums!

Narva

Pennywise i have sent you a pm

I have asked this question before and was given a link that made my head spin, so if anyone has a link for a site that all makes sense to someone new to this, i would be really grateful. many thanks, i just need some pointers on how to try and cut the tax.

dizzyf

Hi, Can't offer much advice as i'm in a very similar situation with my hubby and me. However, what i am looking into at the moment is becoming self employed myself, setting up a sales/administration business for me (with my husbad as my only customer!) I then bill him for services rendered, thus utilising my tax allowance. I will also be ableto claim private mileage for my travel (for me it's not worth the hassle of putting my car down as company car, too much as someone else suggested. I haven't actually gone ahead yet, but I shall keep my informed of the progress. I know how much of a headache it causes, but hopefully it will be ok!

chappers

Pennywise wrote: »

Re travel, he is best claiming the statutory 40p per mile for the first 10,000 business miles per year and then 25p per mile thereafter, and then you pay for your car privately. It gets very complicated if you claim the full costs of the car as you have to add-back the private use proportions and you have to claim capital allowances on the car purchase. If you havn't got the time to be referred to links, as you say in your post, then you won't have time to work out how to claim capital allowances and then do the private use add-backs.:rolleyes:

Not to mention that HMRC are clamping down on this and making it harder and harder all the time to claim for a car.
The best way is for him to pay you a wage for doing some admin/accountancy work for him.If you work make sure what he pays you keeps you under the 40% band yourself , or if you don't work then keep the level of pay under you personal allowance then you won't pay any tax on it at all.
as pennywise said Half an hour with an accountant will probably more than save his fee, your husband could well not be claiming for lots of stuff he should be.

stphnstevey

Might be worth incorporating into a Limited Company - you need to speak to an accountant. You should save in tax ten fold what you pay for a good accountant