Employing retired relative?

**Scruff** · 8 August 2018, 13:06

You can employ anyone, in principle.

You need to take into account that it is not as simple as it sounds. You will be liable for Employer's NIC, Auto-enrolment pension (by taking them onto your Payroll). Also need to take into consideration Professional Indemnity / Public Liability insurances.

**pscont** · 8 August 2018, 13:21

Thanks.
I am not sure, if the person is retired, do I pay ER NIC. They dont pay EE NIC for sure.
Same goes for auto enrollment pension, do I do it? Still it is very small amount anyway.
Insurance wise it is all OK.

My concern is would HMRC argue this is income splitting or something of a sort.

**northernladuk** · 8 August 2018, 13:25

As long as you aren't paying over market rates and follow employment law then I can't see why they will have a problem.

If it's short term then employment is probably not the way to go but I am thinking that is just terminology. Your accountant is the best person to advise the best method of engaging them as you'll be able to discuss both your exact situations.

Are you charging the client more for this or are you doing it just to ease your workload? What will the client think about having one of your family messing with their data? Are you still complying with their Data policies and your own LTD's data responsibilities etc.

I can see why you want to keep money in the family but it's just not for me. Keeping extended family out of my business seems a much more prudent approach. All IMHO.

**northernladuk** · 8 August 2018, 13:29

Originally posted by pscont View Post

My concern is would HMRC argue this is income splitting or something of a sort.

If it weren't a family member would you treat a stranger you take on the same? If so then you've no problems. You are just worrying too much about the family link. If you are giving preferential treatment to your family member and not following the relevant laws and legislation you would to someone else then you could be pushing in to aggressive avoidance or something.

That said it's up to you how much you want to pay to a point. MP's are well documented for over paying family members for doing next to nothing. Could have to pay a good percentage more to convince the right person to come out of retirement such short piece of work

**TheCyclingProgrammer** · 8 August 2018, 13:38

Originally posted by pscont View Post

My concern is would HMRC argue this is income splitting or something of a sort.

It's not though, is it?

**pscont** · 8 August 2018, 13:43

Well the thing is: this has to be done and if not me, there will be no extension. Someone in Bangalore will gladly do it.
So I told them I wont do it, but can have it done for no extra charges to them. They agreed.
So it will be market rate for the type of work for my relative. Short term indeed (1 yr) so I was considering contract it out to them as self employed. Will as accountant what is best.

**pscont** · 8 August 2018, 13:46

Originally posted by TheCyclingProgrammer View Post

It's not though, is it?

No, it is not.

**TheCyclingProgrammer** · 8 August 2018, 13:50

Originally posted by pscont View Post

No, it is not.

So stop worrying about such things.

Employment might not be the best option though, if your relative is going to have autonomy over how to do the work and won't be subject to your direction and control (beyond telling them what you need doing) and they are happy to report the income to HMRC as self-employment then that might be a much easier option.

**doconline** · 8 August 2018, 13:52

Could they not just invoice you as a sole trader if it is a one off piece of work and you don't require them to be a ltd?

Employing retired relative?