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Where Taxpayers and Advisers Meet

Wife been told no longer salaried, has to sort NI and tax - advice please :)

puddles
Posts: 5
Joined: Wed Mar 05, 2014 8:16 pm

Wife been told no longer salaried, has to sort NI and tax - advice please :)

Postby puddles » Tue Sep 08, 2015 8:54 am

Okay, so my wife has been working at a hair salon for the last 17 months where she has been an employee, getting her wages every month with Tax and NI taken off and paid by employer. Just this morning she has had a text from her boss to say that she can't afford to keep paying my wife's NI and tax (do employers pay a tax contribution?) because of new pension guidelines. Instead she wants her to be self employed by another member of staff. She also mentioned showing her her to stay under the minimum levels like another employee, to avoid paying NI/Tax!? I think another employee takes anything over the threshold as cash from the till.

Anyway, I just wanted some advice on what she should do next. She enjoys the job but neither of us feel comfortable trying to dodge the system, so will be declaring everything she gets paid. We have never been self employed, so I was wondering where she should start with sorting her NI and tax out ourselves and how much we need to put aside and when do we pay etc..

She gets between £800-£900 a month after tax and NI, depending on how many days she works. She works Wed, Fri and Sat and is paid at an hourly rate, so obviously some months there are more of those days in the month than others, which is why it varies.

Can an employer just decide to no longer pay NI and tax and make someone self employed? I don't really have a problem sorting it all out, once I know how, but I'm a little worried by the 'taking cash from the till' to stay under thresholds' comment and hope she doesn't insist on this.

My wife has never had a contract, but has worked the same days for almost 18 months now. Any help, advice, pointers in the right direction would be very much appreciated. Thank you!

robbob
Posts: 2994
Joined: Wed Aug 06, 2008 4:01 pm

Re: Wife been told no longer salaried, has to sort NI and tax - advice please :)

Postby robbob » Tue Sep 08, 2015 9:28 am

Can an employer just decide to no longer pay NI and tax and make someone self employed? I don't really have a problem sorting it all out, once I know how, but I'm a little worried by the 'taking cash from the till' to stay under thresholds' comment and hope she doesn't insist on this
She should probably take legal advise particularly if she would be entitled to redundancy pay - basically this option is for her to voluntarily quit her job to be self employed and then have minimal rights - note this may be the only option if the alternative is that the owner engages someone else who will work self employed - practicably speaking employees who have been working less than two years probably have minimal rights generally speaking unless they are a minority.
she can't afford to keep paying my wife's NI and tax (do employers pay a tax contribution?)
They do have an obligation to pay employers NI depending on pay levels - but the tax/ees ni is simply that of your wife.

It's probably more the holidays and Sick pay that the employer is trying to avoid if i am being honest.

This would be the perfect time to be looking around to see if there is similar employment elsewhere without the hassle.

Note this business may be struggling financially and with new sick rules and minimum wage increases coming in it could be that changes are needed for this business to remain financially viable.

puddles
Posts: 5
Joined: Wed Mar 05, 2014 8:16 pm

Re: Wife been told no longer salaried, has to sort NI and tax - advice please :)

Postby puddles » Tue Sep 08, 2015 2:26 pm

Thanks for the reply.

If she did agree to be paid in cash BUT declared every penny, as we would do, would there ever be any comeback for my wife? She'll still be an employee, in every sense of the word, as she won't tick any of the boxes of being self-employed, aside from sorting her own tax and NI. I understand what her employer will be doing is basically tax evasion, and illegal, but my wife knowing this, could she get in trouble?

King_Maker
Posts: 6538
Joined: Wed Aug 06, 2008 3:22 pm

Re: Wife been told no longer salaried, has to sort NI and tax - advice please :)

Postby King_Maker » Tue Sep 08, 2015 4:36 pm

As you surmise, the salon has no tax to pay on your wife's salary. Her employer merely deducts the tax and employee NI and forwards it to HMRC.

I suspect it is the avoidance of Employer's NI and other employee protections which is worrying the salon - Holiday Pay (or lack of it) immediately springs to mind; especially if such a claim were to cover several years.

LozaACCS
Posts: 1504
Joined: Wed Aug 06, 2008 3:55 pm

Re: Wife been told no longer salaried, has to sort NI and tax - advice please :)

Postby LozaACCS » Tue Sep 08, 2015 7:49 pm

I suspect that auto enrollment is the proverbial straw that breaks the donkey,s back.
I am seeing clients being quoted up to £3,000 just to set up the scheme and a further £125 per month to run it.

robbob
Posts: 2994
Joined: Wed Aug 06, 2008 4:01 pm

Re: Wife been told no longer salaried, has to sort NI and tax - advice please :)

Postby robbob » Wed Sep 09, 2015 10:00 am

If she did agree to be paid in cash BUT declared every penny, as we would do, would there ever be any comeback for my wife? She'll still be an employee, in every sense of the word, as she won't tick any of the boxes of being self-employed,

Sticking ones head in the sand is never a good idea, if the Salon owner doesn't hand out payslips or P60's or treat the the bod as an employee - the bod receiving the cash should know this is happening and therefore take action to get their rightful proof that they are employed. It's a tricky area as with no proof either way it ends up as he said she said tittle tattle that could go either way. If it goes the wrong way your wife could end up with penalties and interest and tax to pay for non declared self employed earnings. With RTI rules dictating hmrc must by law have paid salary information every pay packet arguments over "cash in hand wages or self employed payments - i dunno" should be consigned to the dustbin of history.


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