Spouse payments - The Book-keepers Forum (UK)

ck1974 · Veteran Member

Spouse payments

gbm · Guru

Hi Cheryl,

Yes, as long as you pay him below the Lower Earnings Limited £97 p/w.

The work must be genuine, paid at a market rate, payments recorded and subject to the National Minimum Wage.

NB depending upon circumstances and the profit levels of the business, you may wish to consider a partnership (or even incorporation).

ck1974 · Veteran Member

Its only a small business turnover 8K a year, Im actually in the process of closing it down as we are expecting twins and I will not have the time to run it any longer, I just needed to know what I could put though my accounts without getting my hands smacked.

gbm · Guru

Yes, sorry just remembered the other thread about cars!

Same post as before, just ignore the last sentence.

ck1974 · Veteran Member

Thank you, Im beginning to think it would be easier to pay someone to do all this for me but we simply do not have the funds.

Dont suppose you know what the allowance for using a room in the house as an office do you ?? sorry to pick your brain like this xx

gbm · Guru

It's no problem, will send a bill later! smile

I keep meaning to do a blog about use of home, will get round to it one day.

Essentially, you need to do 3 steps:

- Identify your household running costs (including elec, gas, water rates, council tax, home insurance and mortgage interest)
- Identify the number of rooms in your house and the extent to which you use them for business (so 3 bed, dining & lounge = 5 rooms, 1 bed used as office for 50% of time = 1/5 x 50% = 10%. For number of rooms, ignore bathrooms & kitchen
- Times household costs by %

There are numerous examples on the HMRC website.

HTH

ck1974 · Veteran Member

wow, fantastic, thank you.

You are a star !!

Peasie · Expert

gbm wrote:
- Identify your household running costs (including elec, gas, water rates, council tax, home insurance and mortgage interest)
- Identify the number of rooms in your house and the extent to which you use them for business (so 3 bed, dining & lounge = 5 rooms, 1 bed used as office for 50% of time = 1/5 x 50% = 10%. For number of rooms, ignore bathrooms & kitchen
- Times household costs by %

50% of what time?

The number of days a year used as either a bedroom or office?

Or number of hours a days used as a bedroom or office?

Just say you worked 5 days a week. 8 hours each day. The bedroom is not used (as a bedroom) during the week.

At the weekend the bedroom is used (as a bedroom) for 8 hours each night.

What percentage would be applied in this case?

I guess what I am asking is what happens with the 16 hours a day the room is not being used for anything.

It's 1:25PM so I have no excuses for the dumb questions at this hour.

gbm · Guru

Hi Peasie,

In your scenario, I think it would probably be 100%.

I think, from memory, that some of the HMRC examples are probably not as kind. But the room you described is an office. If you took the furniture out and stick a bedroom in, it would be a bedroom.

The application becomes more difficult where someone uses their dining room table to run the business from!

At the end of the day, as with many things, it is a judgement.

cheapaccounting · Veteran Member

just a point - does your husband work else where. Then he would be on a BR tax code for anything you put through your payroll

semsley · Guru

The OPs question was did she need to have a PAYE scheme, I would say yes, if you employ anyone irrespective of what s/he is paid you need to operate a PAYE scheme. (There are exemptions for cleaners and carers though).

cheapaccounting · Veteran Member

If below LEL then you don't have to register as employer, file end of year returns etc

details here ....

http://www.hmrc.gov.uk/paye/intro/basics.htm

You do have to keep accounting and HR records.

semsley · Guru

That's useful, thanks.

cheapaccounting · Veteran Member

can save a bit of work - glad it helped

ck1974 · Veteran Member

He doesnt work elsewhere but does receive carers allowance for our disabled son would I have to knock that of the £97 so that he doesnt go over the threshold ??

gbm · Guru

Yes, carers allowance is taxable income.

ck1974 · Veteran Member

Thanks Nick x
Carers allowance is £53 so if I pay him £40 a week he is under the threshold ??

sound ok ?

gbm · Guru

Yes, £53 + £40 is less than £97.

BudgetB · Guru

Bear in mind that he could only work just over 6 hrs a week otherwise he'd be under NMW

adi2402 · Senior Member

gbm wrote:

Hi Peasie,

In your scenario, I think it would probably be 100%.

I think, from memory, that some of the HMRC examples are probably not as kind. But the room you described is an office. If you took the furniture out and stick a bedroom in, it would be a bedroom.

The application becomes more difficult where someone uses their dining room table to run the business from!

At the end of the day, as with many things, it is a judgement.

Watch what you are doing with 100% dedicated offices in your home as I think there can be knock on affect with CGT on the sale of the house. I don't know the ins and outs but just a little niggle I have. You might want to have a look at the CGT / PPR rules on HMRC website or similar.

adi2402 · Senior Member

from HMRC:

"Restrictions to the relief (PPR)

You might not get the full amount of relief if:

The garden or grounds, including the site of the house, are larger than 5,000 square metres (roughly the size of a football pitch).
You've used any part of your home exclusively for business purposes.
Youve let out all or part of your home (or taken in more than one lodger at a time). But you may be entitled to Letting Relief instead - see the section 'Letting all or part of your home' below.
The main reason you bought it was to make a profit from a quick sale.

You dont have to claim Private Residence Relief - it's given automatically - but you may have to show the amount of relief due on your Self Assessment tax return if you normally complete one. "

from: http://www.hmrc.gov.uk/cgt/property/sell-own-home.htm

but not looked any further into it.

-- Edited by adi2402 on Saturday 29th of January 2011 06:23:17 PM

gbm · Guru

Hi Adi2402,

The CGT tax issue (as well as the business rates issue) gets bandied about a lot - when I said 100%, it was essentially in the spirit of 100%. The 'get out clause' is to say that the room is used in a very small capacity for pvt use, which may be to store something personal. It is not difficult to get round it, and you could substitute 99% for 100%.

However, IMHO, I don't think it would be an issue anyway unless it was substantial. The case of someone using a bedroom as an office and claiming use of home is not something to lose sleep over.

Finally, unless you are using the front room as a shop, the local council won't be too interested in trying to reassess under business rates, which I mentioned earlier.

ck1974 · Veteran Member

Can I just pay his credit card instead of giving him physical cash/through bank ?

ck1974 · Veteran Member

Does it have to be direct to him or can I pay his credit card etc ??? Thanks.

gbm · Guru

I think it's simpler if you actually pay him. He can then use his salary to pay his own credit card bills.

ck1974 · Veteran Member

Okay, thank you x