Is this legal?

[Crazyexgirlfriend]

If I were to bill my other half for services I do for him (instead of doing it for free!) and he paid me into my business account - does that still count as earned income, even though we are a couple? Thanks if anyone can answer that question!

Technically and legally speaking, yes; and if he pays you into a business account then you’re acknowledging that you’re formally providing business services for which you’re being paid.

In reality, there’s a big difference between him paying you £20 a week to do “his” share of the vacuuming and paying you hundreds of pounds a month to be an administrator for his business. Which is it?

A lot of self employed people employ their spouses to do their admin. Not sure about washing and ironing though. If it relates to the business then maybe.

This is common practice to keep one spouse out of the higher income bracket. Not sure about unmarried couples though

It probably has to relate to the business and not be 'domestic services'. Cleaning, childcare etc of one's own home is not tax deductable in the UK.

I think there has to be a demonstrable amount of work done by the partner that benefits the business that is paid in line with what a standard, unrelated employee would earn. So not £12k pa for 2 hours a week for example.

Bit if the partner of a builder or other tradesman did all his quotes, invoicing, making appointments, ordering materials, doing the VAT return, checking bank accounts etc etc, that would probably be OK.

However, if you ran a joint account for household bills and spending this would be money you had access to that wouldn't count as your taxable income, but wouldn't reduce his taxable income either.

However, if you are married and a non tax payer and he is a standard rate tax payer, you can transfer some of your allowance to him, which reduces his tax bill.

You could do it two ways as employed (he would need to sort your pension) or self employed and you would need to do your tax returns. Either way you would need to pay taxes and national insurance for the money you’ve earned. But the tax office won’t agree to paying for personal service eg cleaning his house as a tax deductible income but cleaning the office for a few hours a week or doing business admin would classes as a business cost.

Yes, you are "billing him" and therefore it will be taxable income to you.
You (both) need to be aware of the regulations around employed/self employed workers, it's not as straight forward as deciding you're going to be s/e.

Is there a limited company involved in either side?

No limited companies involved, I’m a sole trader and it’s a genuine service, I run the service for people I’m not married to. He just happens to use the service for free atm.

I don’t earn enough to pay tax but in a few years time I hope to do so as the business is growing every year.

He has a bank account in his name although his salary is paid into our joint account ... So he’d have to move £ from joint account to his sole account and then BACS me the service cost just as regular clients do?

I’ve been self employed for over 5 years and I file tax returns.

He’s a higher rate tax payer so unfortunately there’s no tax bill reduction.

So it sounds like you're something like a hairdresser, beautician, masseuse etc and you cut his hair, wax his nether regions or give him massages and don't charge, because why would you?

I don't see any advantage to either of you to ask him to pay, because that just creates a tax liability if and when you end up earning above the tax threshold and because its a personal service, he can't count it as a business expense.

However, if there's an issue with sharing income and bills in that he has a lot more personal spending money than you, then that's a separate issue that wouldn't be best solved by you asking him to pay you work whatever service you provide to him and you need to look at how your household expenses are shared so money remaining for personal spends is more fair, taking any unpaid labour like cleaning, childcare, cooking, household management is shared, along with paid work.

Thanks @Barbara, the more I earn the more I can pay into my pension. If he pays me for the services then I earn more.

Once I start paying tax in a few years time -I could stop his service.

It seems reasonable to me but I wanted to know if it is legal.

Thank you

He won’t be claiming anything as a business expense, he’s not in that sort of job.