Do I employ DH?

[HenriettaTurkey]

So I'm filling in my tax credit form for 2013-14 & I have a question about DH.

I work full time & we also rent out the house I used to live in, for which I fill in a tax return form, although haven't yet for 2013-14.

DH is sahd, but I transfer £200 into his account each month and he is responsible for communication with tenants, renewal of gas certificates, sorting an issues.

That £200 is similar to the profit we make on the deal.

So, my question is, am I employing my husband & would it be more tax efficient for us to make this deal official? And if so, do I have to do anything other than tell him to fill in a tax return, or do issues like NI become a factor?

The reason I ask is because I am filling in tax credits and I don't know whether to put that £200 under my name or his.

Hi, you'd need to register as an employer with HMRC if any of the following is true:

1. you're paying them at or above the PAYE threshold
2. you're paying them at or above the National Insurance Lower Earnings Limit
3. the employee already has another job
4. they are receiving a state, company or occupational pension
5. you're providing them with employee benefits

£200 per month is well below points 1 and 2. I'm guessing the answer to point 3 is no as DH is a Sahd. Point 4&5 unlikely too?

I'm not sure about tax credits as I don't deal with those but for your self assessment return you would class this as an expense and he would class it as income.

In fact so long as your dh has no other income you could pay him around £100 a week to use up more of his personal allowance and reduce your taxable income.

Thank you so much: that is fantastically useful! And you're right: none of those factors would apply, so it looks like I can use the 'expenses' route.

Is this information on the HMRC website? I had a look but couldn't find it...

Now all I need to do is find out if DH needs to complete his own tax return to declare this income - or indeed if it counts as income at all!

Sorry to hi-jack thread but DH employs me at the same sort of rate but wants to pay into a pension for me as he thinks this will also reduce his tax. Apart from not knowing what sort of pension to start, would this also come under No. 5 above?
Many thanks

Hi, glad it was useful. Yes this info comes from HMRC. Here is a link:

www.hmrc.gov.uk/payerti/getting-started/register.htm

Yes, your husband should do a self assessment return for this income. It would probably be classed as miscellaneous income on the return (google BIM 100110)

Hi elliptic, yes afraid it would come under 4 and 5 below.

He can still pay you a pension but would need to register as an employer with HMRC and would need to run a payroll. It's not difficult to do this, he can do it himself but should be aware of all the reporting requirements which are quite onerous.

An accountant can do all of that for you, probably for about £300 a year or less, so it still might be worth considering depending on his / your circumstances.

As it would be a benefit in kind he would also need to pay NI on this as would you.

Thank you rowing, at the moment there's no NI as the payment to me is so low, so I'm beginning to wonder if he would save enough tax to make it worthwhile or whether he should pay me just below the Lower Earnings Limit and I start my own pension.

Unfortunately I know very little about pensions, although I have a degree in Business and Finance we didn't cover any of these areas at all .

Hi elliptic I just wanted to flag that the pension itself could take you over the NI threshold!

It shouldn't make a difference from a tax perspective whether he pays into a pension for you or whether he pays you more money so that you can pay into a pension yourself. Is there any reason you think it would? Maybe I am missing something.

No rowing you're not missing anything, it's my knowledge of pensions that's missing - university degrees don't seem to give much insight into real life.

Thank you, it's becoming clearer and I will do some more research.

, enjoy the pension research! Not something I can help with I'm afraid.

Sorry to resurrect my old thread, but I am about to press 'complete' on my tax return and I am a little confused.

Where do I put the £2400 expenses that I pay DH to field phone calls/sort gas certificates/organise repairs etc?

Would it go under "Costs of services provided, including wages" or "other allowable property expenses" or somewhere else?

Or does it not really matter?

Thanks!

Also...as he would class it as income would that make him self employed? Have just looked on the site to try and figure out how to register him, and ended up going round in circles, although he does have a Govt Gateway No now.

This is all very confusing...and I'm 10 days off giving birth! Meant to do this so much earlier, and know we'll probably have to pay a fine now. Can I blame the HG & SPD? Not sure the Govt would really care about that...

Bump