To consider this a job and receive payment/tax credit

(42 Posts)
morethanpotatoprints Mon 29-Apr-13 15:43:15

Ok, my dh has a small business and I am sahm.
During my week I must clock approx 24 hours doing business related work to assist him. My problem is that yes he could do these things himself, but the time I save him he can use productively in the business himself and in fairness he does.
He draws a wage from the business but doesn't take any dividends, the business could stand me taking 24 hrs pay at NMW. This wage would entitle me to more tax credits, which would definitely come in useful.

My role includes: Meet and greet, issuing permits, making hot beverages, laundry/dry cleaning trips (only business suits here), taking messages, keeping diary. Advising potential clients/customers, liaising with suppliers, customers, providers etc. Bookkeeping/ banking and post. Photocopying, filing,.Entertaining clients and colleagues is also quite often done. Lots more that I can't really think of now.

So is this the job of a PA, is that what they do, sort of assist in the day to day running of the business? If so I am due 20 years back pay grin

Are you sure you would get more tax credits? Your household income would increase by around £10k, that is likely to reduce your TCs rather than increase them.
If you genuinely work for him then sure, be employed. You should get paid if it's a real job (though I'm not sure washing your husband's clothes is a PA job rather than a SAHM one) and it would be good for you to pay NI.
I do think you might have it wrong about tax credits though.

FasterStronger Mon 29-Apr-13 16:37:15

surely you are assessed as a household for TC?

UserError Mon 29-Apr-13 16:46:07

You certainly could claim and get everything set up properly with PAYE so you're in the 'system' as a proper employee. It does sound like you're doing the job anyway but with none of the benefits a proper employee would get. Whether or not it would increase your tax credits is another matter - your household income would increase, which usually means your tax credits would go down unless the business is making a loss and you offset that against earned income.

flowery Mon 29-Apr-13 16:51:58

Because the household income would go up and therefore benefit the whole family if you took a wage, why is your DH not already doing this if the money is available in the business? Is he saving it to invest in something or similar?

morethanpotatoprints Mon 29-Apr-13 17:21:56

I think the problem I have really is a moral one. At the moment I do the job without payment and dh is min wage, so in effect there will be two min wages coming in and of course mine would be pt at 24 hours. According to the calculator our tax credits would increase because I would be employed.
Dh doesn't take more out of the business because the amount left is needed for goods to buy in to do the work and of course to enable his wage to continue if he experiences a lean month, usually January. According to tax credits and tax office it isn't included as income because it belongs to the business. If we wanted to take some out in the form of a dividend then it is taxable. It just seems silly that I could on paper be employed and yet haven't really looked into this over the years. I pay voluntary NI and have done since not working but is this a higher amount if you are employed?

FasterStronger Mon 29-Apr-13 17:25:38

so you would be taking the same total salary but split over two people instead of one?

morethanpotatoprints Mon 29-Apr-13 17:34:48

Faster.

I think so in effect. The money he earns goes into the business (he is very honest and declares every penny) had to say that as we know loads of people who don't.

He then takes a wage which is usually min wage as explained above. If he was short one month and the business couldn't pay him, the family wouldn't eat. There is enough in the business from what he earns to pay me for 24 hours at min wage, just about. There will not be much left then in case of emergencies though, the business is not money rich at all, but does have security of tangible assets. I know it may seem like I am just after more money because times are hard but I legitimately do the job and over the years have built a reputation as his PA/ assistant/dogs body etc, as well as his Mrs grin.

flowery Mon 29-Apr-13 19:45:28

Honestly, it doesn't sound as though the business can support it financially if you think it could 'just about' afford it, and if it would mean in a lean month the business couldn't afford to pay it's only current employee.

There may well be advantages to paying you both half of what he currently earns, especially if he earns more than the tax free allowance, or in terms of getting you NI paid, but it doesn't sound as though the business is in a financial position to commit to 24 hours a week paid employment for someone.

inabeautifulplace Mon 29-Apr-13 20:13:46

Is the problem a moral one? Surely there would be a moral dilemma if you were massaging the facts to create a suitable job where none existed. If you work 24hrs in this role and it makes financial sense to do so then it's a choice. Plenty of people earning 3-100 times your family income make similar choices. Doing it with a low income is surely more acceptable?

I still don't understand how you earning more could increase your household tax credits. The only way that could happen would be if you then used paid childcare. You would then get a contribution but you wouldn't be better off because you would be paying some of the cost yourself.

morethanpotatoprints Mon 29-Apr-13 21:23:32

Sorry Ehric I am not very good at explaining this.

At the moment I am a sahm and unemployed. I don't receive benefit as not job seeking. Dh has small business from this he draws min wage and the rest stays in the business for business use and to pay his wage every month. If I was to become an employee of the company our family income would still be the same as really I am having half of ds wages. However, because I would be employed I would be entitled to tax credits and our family would receive more.

So you would reduce DH hours and you become an employee? I thought that you were eligible as a household once 1 of you were working a minimum number of hours, but if you have done the calculator and it says you would be entitled to more, then it might be worth doing.

You should also reduce your household tax bill since you would benefit from both of your earnings below the tax threshold.

Tbh, you are hardly hiding your millions off-shore...you are only seeking the best way to make your business work fr your family within the (clear!) confines of the lawful systems! I say 'clear' since it is nowhere near the blurred line of tax evasion/benefit fraud!

GrendelsMum Mon 29-Apr-13 21:39:02

Flowery's the expert on employment matters, but I dont see why you shouldn't take a wage for the work you do for the family business. I don't know anything about working tax credits, but could the business pay you flexible hours (which is presumably what you do) depending on takings that month?

That makes sense. Yes, I would do it in that case.

HappyMummyOfOne Mon 29-Apr-13 21:41:31

Tax credits are based on income, it doesnt matter if one or two people earn that income the amount of benefits paid remain the same. There is no extra if both adults work. Given your household income would remain the same just split its of no advantage bar your own personal allowances.

As you already claim WTC (which is only paid for incomes less than around £15k) then I agree with Flowery in that the business would not appear to support two workers.

If you plan to do 24 business hours, how will that fit in with home educating? HMRC are checking more SE claims than ever to ensure people are running viable businesses rather than simply for benefit reasons.

However given UC required both adults in the household to work in order to claim more people will start looking for ways to meet the criteria.

morethanpotatoprints Mon 29-Apr-13 21:51:26

Happy

Apparently the difference between me working and not working is £136 a week according to the calculator. The income that dh presently receives is not business turnover but his actual wage drawn from the business.
I am already doing the job at present and have done all our married life, I just have never been paid to do it. I don't do set hours 9-5 or anything because sometimes I could have to sort something out at midnight due to the nature of the business.
I don't think UC is going to happen anytime soon btw as it was going to be trialled in the town where I live and has just been scrapped. I must admit though that the new criteria was part of the reason for becoming officially employed but not solely. Having not been employed for 20 years I would find it hard getting work if I ever had to, at least this way I will have been officially employed.

HappyMummyOfOne Mon 29-Apr-13 22:17:21

I wouldnt trust the calculator then, there is no bonus element for you both working if you truly are going to simply split the income already bought into the household.

It does contradict your other thread though where you say people should easily be able to live on one persons wage yet you would have two and are only splitting it to net more in benefits.

morethanpotatoprints Mon 29-Apr-13 22:30:14

Happy

I still maintain it is possible to live on one persons min wage. There were no tax credits when ds1 and ds2 were born, we managed as we would now I'm sure. As I said the UC/Tax credits is not the sole reason for this, but also for the security of being able to find other work if the need arises. It hasn't yet but we have 3 dc and who knows what we made need the extra for. Yes there would in effect be 2 incomes but still only equivalent to one min wage split in 2.
I am happy that the moral dilemma has been taken away though if we won't gain extra benefit. thanks

tabulahrasa Mon 29-Apr-13 22:36:40

I'm employed by my DP, so is my sister...why would it be an issue?

morethanpotatoprints Mon 29-Apr-13 22:37:42

Youcan'ttouchthis

Thank you. Yes I know its not millions and this probably sounds a bit daft but you can probably see from the history of low income, neither dh or myself are driven by high earnings. I have nothing against those who have, its each to their own. But I really admire my dh for his straight down the middle honesty and as I am the one who does the form filling like to know I am being honest for all our sakes. I couldn't sleep at night and would be worried sick. grin Dh is often asked to do things for cash, he says yes I accept any payment and then they are shock as he says it will be declared.

morethanpotatoprints Mon 29-Apr-13 22:41:03

tabulahrasa.

Only moral as would be splitting his income not creating another. This may prove to pay more TC/ meet criteria for UC.
I suppose a bit like the Politicians who had wife as employed bookkeeper to save tax.

tabulahrasa Mon 29-Apr-13 22:48:43

The way we work it is...other employees are always paid, DP only takes a wage if there is money there to be had.

I happen to live with him, but that doesn't change the fact that I am actually employed by him.

ssd Mon 29-Apr-13 22:54:55

I dont see why not, but does the new UC require both partners to work then? Why does it matter if 2 people work to bring in the same money that one person gets just now?

morethanpotatoprints Mon 29-Apr-13 23:26:03

ssd.

It shouldn't do but apparently to meet criteria for UC both partners have to be working or seeking work. As a long term sahm I never wanted to become employed so hence would lose UC as not prepared to job seek.
This is my dilemma now, I can see my judgy pants sister saying, you've only done this to get benefit. When there is another good reason like not knowing what's round the corner. Who would have thought that a government would make so many cuts to welfare. Who would have thought that interest rates would go from 4% to 15.5 %? But both happened.
Tabulahrasa
It is the implication of sharing dhs wage that is the problem, not being employed by him. Sometimes he has to pay up to 16 people before he receives the money for work undertaken and obviously other business related expenses. The business is doing well but the money needs to stay there not in our pocket. So because we are in effect low income and would both be working we will probably gain money from TC/UC so I am lead to believe.
Our accountant says its a pretty well known loophole.

tabulahrasa Mon 29-Apr-13 23:34:20

But it's only sharing his wage if you think of it as sharing his wage - otherwise it's paying his employee first and seeing what's left over for him to take.

janey68 Mon 29-Apr-13 23:50:48

Yes it's no different to a politician employing his wife.
I am a little confused though about the whole not wanting to be in work thing though, when this seems to be precisely what you do want. (Not that there's anything remotely wrong with working I hasten to add! Just seems a bit of a mixed message)

janey68 Tue 30-Apr-13 07:40:46

Actually reading through again I'm a bit unclear about whether you are already doing this work 24 hours a week . If its already work which needs doing then its a job and there is no reason why you shouldn't be employed to do it and paid for it. But you also make it sound like your husband will drop hours as you up yours so its a little unclear. If its not so much work which needs doing, but more 'creating ' a job to try to maximise your situation re tax, then tax avoidance is something some people have a moral issue with but is entirely legal so you aren't doing anything wrong - as long as you don't judge anyone else for doing it!
However looking at the scale of the business and the figures you mention I am in agreement with others that it doesn't look wholly sustainable to be employing many people. I also don't understand the point about tax credits. But why not go for it if this is a new venture and will help utilise your skills.

ChunkyPickle Tue 30-Apr-13 08:01:34

Go to an accountant. They are experts in this kind of thing, and a good one will always save you at least their fee.

As a rule, I would have thought that it is better for two people to be paid half the wage, just because it means you're using two tax allowances, even before any kind of tax credits are taken into account.

ssd Tue 30-Apr-13 08:02:07

I'd say you should do it, in fact you should have been paying yourself instead of leaving the money in the business, you do the work so you should get paid.

I dont see why you feel the need to mention it to your sister, its not her business.

I think its a case of accepting reality rather than taking a moral stance.

FasterStronger Tue 30-Apr-13 08:12:19

Morethan, have you thought of going to see CAB?

I don't think the numbers add up but you need a specialist. Going on my figures 15k = 46.6 hours per week at minimum wage - which would not give you both enough hours for UC without you job seeking.

but you need expert advice, particularly because of the home schooling aspect.

Llareggub Tue 30-Apr-13 08:17:42

I get where you are coming from. I second the suggestion to see an accountant.

LittleBearPad Tue 30-Apr-13 08:36:08

If it's more about 'having a job' so that in future (should you need it) you'll have recent work experience on your CV then why do you need to do 24 hours work? I know this is the UC benchmark but this doesn't seem a major issue at the moment as it doesn't seem you'd get additional tax credits.

Could you be paid for ten hours (for example) so you have the role (and CV experience) then if the UC/TC rules change think again. Plus ten hours might look like it fits around HEd time too?

morethanpotatoprints Tue 30-Apr-13 12:19:10

Thank you all for your comments and will definitely speak to the accountant again.
She explained it to me and I understand at the time, then go away and couldn't explain it again to save my life.
The H.ed isn't really an issue as I am doing both atm just not getting any payment/ not officially employed. Neither specifically requires set hours and can be done whenever it suits.

ssd

Up until now we have left money in the business for things like pension, dc for uni etc, house repair (emergencies) holidays. Not that we have any (first last year). Obviously if we take it out as form of dividend for personal use it is taxable income then and treated as such. So we try not to take it out unless we really need it.

Janey Yes it is all work that needs doing, but it is a bit like creating a role, but the jobs have to be done. My dh does use the time I save him to do business related activities. This has helped him over the years to do things that otherwise get put to the bottom, missed, overlooked etc due to time restraints.

allmycats Tue 30-Apr-13 16:31:05

Go and talk to your accountant again, you should be maximising the usage of both your personal tax allowances and ensuring that both of you pay a national insurance stamp.

janey68 Tue 30-Apr-13 16:40:17

Yes I agree- you need specialist advice, particularly regarding things like pensions which need long term projections and planning and where typically people tend to underestimate their needs ( not saying you are necessarily but that's the general trend!)
Sounds like you should definitely go for - apart from
Anything else it puts your skills on a more formalised basis should you ever wish to use them anywhere outside your husbands business

LittleBearPad Tue 30-Apr-13 21:07:08

Can you get the accountant to put her advice in writing. At least then you have it to refer to later.

Viviennemary Tue 30-Apr-13 21:49:24

I've tried to understand this but don't. Do you mean if you take a wage then your DH's wage will decrease. Or will it stay the same. Do you mean because the rules for UC are changing and require both partners to work or seek work in order to claim UC once they have children over a certain age. .

For tax credits it will make no difference at all. You'll get to both use your personal allowances though, which will make you better off. I would worry about rules for UC when you actually get transferred to it.

morethanpotatoprints Tue 30-Apr-13 22:16:06

Viviennemary

Its a bit of both really, it would be great financially to be able to meet criteria for new UC if it ever happens. But also, the cuts and past history along with being on here has made me realise you don't know what's round the corner. After 20 years of little employment, I don't think i'd be offered a job if I needed one tbh. This would be official employment and be good for cv if I ever needed a job outside of home. We would both take min wage, obviously he is able to work many more hours than me.

I haven't had time to speak to our accountant yet but will definitely ask her to put it in writing, even if its so I can come back and explain grin

The reason I don't want to job hunt outside of home is because with or without payment I enjoy helping dh with business and H.ed dd. This would be much harder working away from home.

UterusUterusGhali Tue 30-Apr-13 22:53:05

Yes, you should do it. You're doing a job.

Viviennemary Wed 01-May-13 14:06:08

Thanks for explaining. It definitely would be an advantage tax wise because you'd each get the personal allowance before paying tax. I think the accountant should be able to help you with the tax credits side of things. It's a wonder anybody actually understands them. they are so complicated!

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