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NI requirement
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Nick



Joined: 02 Nov 2004
Posts: 33978
Location: Hereford
PostPosted: Sun Jun 01, 14 11:51 pm    Post subject: NI requirement  Reply with quote    

If I wish to pay someone to work for me, because it will save me paying tax, what are the things to consider? Clearly, he'd have to pay tax at the appropriate rate, but does he or I have any NI contributions to consider. He'd be paid around 6,000 a year, and this would be his sole income.

Rob R



Joined: 28 Oct 2004
Posts: 31902
Location: York
PostPosted: Mon Jun 02, 14 12:05 am    Post subject: Reply with quote    

Is he to be employed or self-employed? I presume employed, as it's his sole income, in which case he'll be getting less than the 153/week threshold for NI. However, he may wish to pay voluntary contributions to maintain his entitlement to benefits including state pension. If he's over state pension age, he doesn't need to pay any NI contributions.

Nick



Joined: 02 Nov 2004
Posts: 33978
Location: Hereford
PostPosted: Mon Jun 02, 14 12:24 am    Post subject: Reply with quote    

It's my son. He's still at school. I have an income from a property, and pay 40% tax on the 'profit' from it, and the remainder goes to pay bills. I do some work on the property, and son helps, for which he doesn't get paid (roof over his head, access to my beer fridge, etc, etc).

If I paid him, I'd keep the 40%, and he could pay the bills.

Am I missing anything?

Mistress Rose



Joined: 21 Jul 2011
Posts: 10467

PostPosted: Mon Jun 02, 14 7:01 am    Post subject: Reply with quote    

He would have full rights like minimum wage, paid holiday, sickness pay, and from 2017 you would have to set up a pension scheme for him, sooner if you employ more than just a few people.

Rob R



Joined: 28 Oct 2004
Posts: 31902
Location: York
PostPosted: Mon Jun 02, 14 9:52 am    Post subject: Reply with quote    

Nick wrote:
It's my son. He's still at school. I have an income from a property, and pay 40% tax on the 'profit' from it, and the remainder goes to pay bills. I do some work on the property, and son helps, for which he doesn't get paid (roof over his head, access to my beer fridge, etc, etc).

If I paid him, I'd keep the 40%, and he could pay the bills.

Am I missing anything?


Interviews? There might be a better candidate out there... (sounds like a good job to me). Plus all the stuff Mistress Rose said, of course.

Nick



Joined: 02 Nov 2004
Posts: 33978
Location: Hereford
PostPosted: Mon Jun 02, 14 10:06 am    Post subject: Reply with quote    

The last thing a 17 year old living at home in full time education needs is sick pay and holiday pay!

Chez



Joined: 13 Aug 2006
Posts: 35904
Location: The Hive of the Uberbee, Quantock Hills, Somerset
PostPosted: Mon Jun 02, 14 10:08 am    Post subject: Reply with quote    

Can you talk to your accountant about it? Ours is really helpful about that sort of thing.

onemanband



Joined: 26 Dec 2010
Posts: 1473
Location: NCA90
PostPosted: Mon Jun 02, 14 10:19 am    Post subject: Reply with quote    

That's some beer fridge if it equates to 6k a year

6k(just labour?)per year sounds a lot to maintain one property. Or does job cover other things ?

Even if son only works for you I can't see why it couldn't be done on a self-employed basis if each job is done on a price.

Treacodactyl
Downsizer Moderator


Joined: 28 Oct 2004
Posts: 25697
Location: Jumping on the bandwagon of opportunism
PostPosted: Mon Jun 02, 14 10:27 am    Post subject: Reply with quote    

It's sounding a bit like tax avoidance to me.

Is there any possibility to transfer ownership of part of the property to son so he'd get some of the rental income? That might help later for IHT purposes but would need good legal advice.

tahir



Joined: 28 Oct 2004
Posts: 44229
Location: Essex
PostPosted: Mon Jun 02, 14 11:45 am    Post subject: Reply with quote    

Treacodactyl wrote:
Is there any possibility to transfer ownership of part of the property to son so he'd get some of the rental income? That might help later for IHT purposes but would need good legal advice.


Prolly a good idea

Rob R



Joined: 28 Oct 2004
Posts: 31902
Location: York
PostPosted: Mon Jun 02, 14 11:48 am    Post subject: Reply with quote    

You can transfer up to 30k in any one year before Capital Gains kicks in (providing you live for a further 7 years after the transfer).

Nick



Joined: 02 Nov 2004
Posts: 33978
Location: Hereford
PostPosted: Mon Jun 02, 14 11:48 am    Post subject: Reply with quote    

Well. It is tax avoidance. I've already lost 40% of the cash before we bought the place and they want a further 40%. My priorities are to ensure financial security for my kids. I don't make much of an apology for that.

As for transferring it to him, he's only 17 so not yet.

It more than a beer fridge. It's a room with bathroom in a house with full access to every other room, the freezer, all meals, bills, clothes and taxis thrown in. Also, we supply a holiday or two every year and complete laundry services.

You don't have kids, do you?

Nick



Joined: 02 Nov 2004
Posts: 33978
Location: Hereford
PostPosted: Mon Jun 02, 14 11:54 am    Post subject: Reply with quote    

We don't have an accountant. My life is very simple. Mostly I'm paye plus rental income an the tax return is simple. Just wondered if I'm missing a trick and it appears I am.

We did have an accountant once. He charged 500 to fill in the form for me but I had to provide all the figures. He offered no advice. More of a robbing bastard, than an accountant, tbh.

Nicky Colour it green



Joined: 25 Jun 2007
Posts: 8693
Location: Devon, uk
PostPosted: Mon Jun 02, 14 12:16 pm    Post subject: Reply with quote    

as i understand it, the pay will be less that the NI thresholds for both employers and employees NI - but you would still need to issue payslips and do the PAYE system, including a year end submission etc. All relatively easily - I think I would start by contacting linland revenue and asking how to proceed. I do wonder if you would be obliged to have employers liability insurance or the like....(dunno how the law stands on this)

Alternatively son could invoice you for his time - he would be self employed, and could fill in a form to not pay NI due to low income,and would have to submit tax return but wouldn't pay any tax due to being below tax allowance. If he only has the one customer (you) IR might not accept this..
again i would phone inland revenue and talk it over.

john of wessex



Joined: 18 Jun 2007
Posts: 2130

PostPosted: Mon Jun 02, 14 1:09 pm    Post subject: Reply with quote    

My brother employs his wife in his business.

Its the sort of arrangement that HMRC look at very hard

So I'd say be very careful

You could transfer the property to a trust so your son can have the income but not access to the capital.

I would be inclined to make it a discretionary trust in case he needs to claim a means tested benefit

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