Hi there, I am going to be offering out free tax advice to all whom are concerned..
Top Tip Number One..
Can I employ my family?
If your young son or daughter washes your car or van, you can legally pay them and claim that as a business expense! Very few self employed people are that meticulous in recording their expenses.
The rules on paying family are pretty straightforward. You must pay them the “going rate” for the job that they do. You must actually pay them, although this can be done up to three months after the tax period in which you are claiming the expense.
Every family member is entitled to earn up to £110 per week without incurring tax or national insurance. So for a student at school or university, some unemployed or working part time, this payment can be entirely tax free for them and wholly allowable for you. Retired parents can also be possible employees –over the age of 65 there are enhanced tax free allowances.
Paying family members who are under the tax/ NI threshold is a really simple affair a form P46 is signed with the declaration “This is my only or main job”. You do not even have to send this form to HMRC – provided their total weekly earnings from all sources do not exceed £110.
When employing family avoid the trap of paying members who are employed or subject to tax. In this case, you would need to operate a payroll (and all the expense and time that entails) and your paperwork mountain will grow exponentially.
Top Tip Number One..
Can I employ my family?
If your young son or daughter washes your car or van, you can legally pay them and claim that as a business expense! Very few self employed people are that meticulous in recording their expenses.
The rules on paying family are pretty straightforward. You must pay them the “going rate” for the job that they do. You must actually pay them, although this can be done up to three months after the tax period in which you are claiming the expense.
Every family member is entitled to earn up to £110 per week without incurring tax or national insurance. So for a student at school or university, some unemployed or working part time, this payment can be entirely tax free for them and wholly allowable for you. Retired parents can also be possible employees –over the age of 65 there are enhanced tax free allowances.
Paying family members who are under the tax/ NI threshold is a really simple affair a form P46 is signed with the declaration “This is my only or main job”. You do not even have to send this form to HMRC – provided their total weekly earnings from all sources do not exceed £110.
When employing family avoid the trap of paying members who are employed or subject to tax. In this case, you would need to operate a payroll (and all the expense and time that entails) and your paperwork mountain will grow exponentially.