Working for my husband, some questions...(9 Posts)
Hi, would be really grateful if anyone with experience of this could give me some advice. My husband has been running his own tutoring business for almost 2 years, last year we were still under the threshold for paying tax but I think next year we'll be over.
I've been helping from the beginning, doing all admin, accounts, organising etc, and am getting busier as the business grows. My dad suggested that my husband pays me for my role, which wouldn't really make a difference to me as all our money is shared anyway, but it might take us back down under the tax paying threshold, which would be useful without being dishonest!
My questions are:
would I then need to set us as self employed? Or is there another way of doing it without getting into paye numbers and stuff?
I don't currently work, would this have any impact on working and child tax credits?
And any other thoughts around this sort of thing really...
You really need to contact the Revenue to talk through all this- they are very helpful! search2.hmrc.gov.uk/kb5/hmrc/contactus/home.page
A number of possibilities:
He could take you on as an employee. As he would presumably be paying you less than £107pw he would not need to register with HMRC or make any deductions, and because you are his wife there are few legal implications (in particular he would not need employers liability insurance). Because his income will go down by the same amount that your goes up there should be no effect on the net amount of Tax Credit you get, but beware that when you move to Universal Credit (it is not yet finalised when existing claimants will move) there are rules about minimum profit levels for self employed businesses which will catch you if they go ahead in the current form.
You could become a partnership and share the profits (equally or unequally). The same comment about Universal Credit applies.
You could become self employed, although HMRC may challenge this because you won't really be in business. Again the same comment about Universal Credit applies.
Thanks Mr.Anchovy, I need to look in to this Universal Credit thing, no idea what that is.
The obvious thing seems to be for him to employ me, what I'm trying to understand is that if he's not registered with HMRC and I'm not self employed, how to we record this transaction? Wouldn't that be 'cash in hand' and therefore illegal?
Will give inland revenue a call.
If he employs you he records the payment as a business expense. Providing you earn less than £107 in every week and you have no other job when you start being employed by him (it is good practice to fill in, sign and keep a P46 form to evidence this), he does not have to operate or register for PAYE as confirmed here and the 'cash in hand' payment is perfectly legal.
Employees do not have to notify UK employment income to HMRC, the obligation is on the employer to notify if necessary.
Thanks MrAnchovy, that's just the information I needed.
Yes as Mr A says that works fine. We are moving to £10k personal allowance each in the next few years hopefully to that could mean you could in total earn up to £20k before any tax is paid. It is probably sensible if the sums start getitng bigger than that to take some tax law advice.
"that could mean you could in total earn up to £20k before any tax is paid."
... but it is unlikely that the National Insurance thresholds are going to go up as far (I believe current treasury projections are based on CPI only) so you will start paying NI at a little over £15k between you.
Very true. The sooner we merge NI and tax the better. However even with just NI it would be better the two of them worked and earned their half than only one.
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