Paying wife for admin work

[richreed2426]

Hello,

I run a building company and my wife is a hairdresser who rents a chair and pays all her tax through an annual self assessment. She will be helping out the building company and I will pay her monthly for this. It would be easier if I do not add her to the payroll as it seems simpler for her to declare this income through her self assessment she already completes for the hairdressing.

Am I ok to leave her off the payroll and simply pay on receipt on an invoice she can raise for the work she does for the building company? Is there a higher limit to how much I can pay her like this before I need to put her on the payroll as I read that after £520 a month you need to deduct NI at source - is this correct?

Any help would be greatly appreciated.

Many Thanks

Richard

[bd6759]

If she is your employee, you need to operate PAYE.

If you pay her for cutting your hair, or your employee’s hair, she can add that to her turnover.

[richreed2426]

Thanks for your reply.

She is no more my employee then a part time cleaner would be and I wouldn't put them on the payroll.

She is a hairdresser in her own right - she's not cutting my hair (well not for turnover) or anyone's hair related to the business - she rents a chair in a unrelated salon.

What are your thoughts with these considerations?

[bd6759]

The part time cleaner is running a cleaning business and gets taxed on the profits of that trade.

Your wife’s trade is as a hairdresser. Only hairdressing income is included in these accounts.

Your wife will be an employee unless she provides similar services to other customers. Then she may have another trade.

[robbob]

It's probably even tax efficient to be on the payroll if there will be no NI charged compared to likely 9% on her sole trader profits!

She is no more my employee then a part time cleaner would be and I wouldn't put them on the payroll.

I would disagree - exactly the same would apply for a part time cleaner as would apply for your wife - unless they are in business as a cleaner and it is agreed they are billing you on that basis you would need to deduct paye and add to payroll - there is no automatic right to say you are in business if you are not in business! . If they are in business as a cleaner they would almost cretainly have multiple clients (new startup being the exception) - and that would set them apart from your wife.

Note one other issue i the potential hassle of coping with money laundering which could involve fees being paid to hmrc and he being supervised by them - i am not saying her duties would deffo require the hassles of MLR but its highly probable thather duties potentially bring her in the scope of this area.

https://www.gov.uk/guidance/money-laundering-regulations-accountancy-service-provider-registration

Finally here is link to employment status tool checker provided by hmrc - i would be very surprised if your spouse is not confirmed to be an employee when you enter in factual answers to this yes / no checker (its easy to get the answer you may want by faking the answer so answers must be based on facts!) . I would say the employment status tool checker can be slightly biased i hmrc's favoured route of employment but you never want to go against hmrc decision in this regard without knowing exactly why you would be doing that if this decision is "employee"

https://www.gov.uk/guidance/check-employment-status-for-tax