Employer paying his money into my bank account - tax implications?

[Sweettalking]

I'm a bit worried about a situation I've been persuaded into by my employer. It sounds dodgy as hell but really isn't. My employer is super rich, like £10million home, everything you could ever wish for. I work as his housekeeper/maintenance person. I sort out window cleaners, get the dishwasher fixed, get the toilet unblocked, you know the sort of thing. As such he asked me to open a bank account and he puts in £1000 a month. From this I pay for the laundry, the window cleaner, shop for his groceries, there's not much left at the end of each month.

I asked that he just open a business account and get me a card. He said it would mean going to the bank (we live very rurally so not a physical bank for about 30 miles) so it was easier if I would open an internet account in my name.

This has been going on for about six months. Recently I started doing a bit of extra cleaning work and have registered as self employed, as well as paying PAYE for my main income. When my tax return comes will I have to declare this £1000 from him as income? Its not my money, I run a spreadsheet for him that he checks regularly and every penny goes on his house maintenance.

Now I feel really stupid I've allowed myself to be persuaded into this by this much cleverer man. I don't know the reason he wouldn't really open a business account. He's not a crook or a bankrupt, he's genuinely a very wealthy, highly educated and successful man running a number of top businesses.

Can anyone help with some advice please? I'm a bit scared to ask him to stop, and in any case I'll have to declare the money that he's already paid into it.

You don't have to declare this as long as you aren't personally benefitting from any of it.

It's no different from thousands of jobs where we have to pay for our travel expenses or other incidental purchases for work using our own money and then claim it back as expenses. Those additional payments into our own bank account are not considered income and do not have to be declared except if it's something we are getting non-work personal benefit from too. The technicality is just that you are effectively getting that "refund" in advance. That makes no real difference so long as he doesn't allow you to keep the balance of the account when you leave that employment, or if you spend anything from there on anything for you.

Thank you so much, that is very helpful. I hadn't thought of it like an 'expense' account, but I guess that's exactly what it is.

Make sure you keep receipts for absolutely everything.

Hmmm @YobaOljazUwaque I don't think that's quite right. If you are self employed you SHOULD be putting your expenses through your books, declaring the income but deducting the expenses, therefore ending up with no tax liability (as it should just balance £x in and £x out). If you are VAT registered you would be adding VAT to the expenses when you bill them (except in very specific cases -disbursements).
OP, in you case I would carry on keeping very careful accounts for the account you run for your boss, but I would not include that money in your self employed accounting. It sounds like you are already very careful to keep that account for its intended purpose only which is excellent.

@DustyDoorframes I understood that this expenses account is entirely unrelated to the self-employed cleaning work. For the purposes of her main employment she is an employee, not self-employed. Separately she also does some self-employed work but the expenses for that won't go anywhere near this dedicated account.

Yes good point @YobaOljazUwaque I'd muddied the waters there with the employed/self employed stuff.

I'm an accountant. Ask your boss to open an account in his own name with you as a signatory. This situation has trouble written all over it if you are self-employed as well.

Agree with PP this set up could cause you issues.

If the account is in your name only & you're using it to pay for general household stuff like shopping etc with I assume absolutely no proof that these purchases are in fact for your employer (you could have a million receipts from Asda but that's not proof that anyone but you has used the groceries purchased) and there is a regular payment from him going into this account it looks like you are being paid £1,000 per month but that this is not being declared for PAYE purposes.

That’s what I’m worried about. The money he pays in is unrelated to my self employed income which is totally separate. It’s a bank account that is only used for him to pay in and for me to spend money on him. I have a very careful set of spreadsheets that show exactly where it’s spent but there’s a lot of payments that could look as though they’re being used for my own living expenses, groceries, window cleaning, fuel for his car. I think I’ve set myself up with a tax nightmare due to my own request for self assessment because of my little bit of extra cleaning (for other people).

Your employer probably hasn’t put much thought into this as it just seemed an easy, straightforward way for you to have access to money for the household. As another poster has said it would be better for an account in his name with you as a signatory or given a debit card on that account. As he’s so wealthy I’m sure he will have some sort of Premier/Private banking facility where he can just call someone to set it up. I’d ask him.

I guess the difference between the kinds of "expenses" scenarios that I am used to, and your situation OP, is precisely as you point out - its easy to prove that the flight to New York I took on a Monday, having paid with my own money, and returned on a Friday - is a business trip that can be backed up with meeting notes and events records and an email trail. It would be a lot more difficult to prove if it was a tank full of petrol or a full supermarket shop was on behalf of an employer rather than yourself. It's the fact that the things being bought are everyday things that could be for anybody that is the issue, not the fact that the funds are going through your account alone. With that in mind keeping the money in the name of the employer does seem more sensible even though you are doing nothing wrong, because proving it wouldn't be easy.

If he accused you of stealing, by spending some of that on yourself - how could you prove otherwise?