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IR35 Baby

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    IR35 Baby

    What are the rules around maternity pay for spouses who receive an income/dividends through a limited company? I do not want to ask my accountant at this stage for obvious reasons...

    My wife currently receives a salary and 50% dividends via my limited company - she maintains FreeAgent and does the other small administrative tasks. I have longish hours (12 - 14 hours a day out the house), so rely on this to keep my weekends free, and to minimise childcare costs for our two year old daughter. I am in a contract until end of May, currently outside IR35 status, but awaiting a determination from the client under new legislation.

    My wife has just accepted a job (24 hours per week, nights) at a local care home - she has worked in healthcare industry previously. We decided this as a precautionary move in case current client decided to terminate contract and I was tempted by a permanent role. She won't be able to start this job until after Christmas due to the required DBS checks.

    Assuming wife was around 4 weeks pregnant...

    a). If she rejected the care job and stayed working for my company, if outside IR35 status persisted, would she be entitled to maternity pay? Could my company reclaim this from HMRC?

    b). If she took the care job, does the 26 weeks working requirement include time working for my company, or does the clock reset with the start date for new job?

    Sorry for garbled post - heads in a mess at the moment. I'm over the moon, but I don't want to stitch ourselves up financially... - a "go perm or leave" response from my client; no maternity pay and no opportunity to work for 18+ months would be far from ideal, and as I am really enjoying working for current client (especially after last client was an utter disaster), a perm offer would be tempting, but realistically we'd need some form of secondary income to make this viable.

    #2
    a) yes. She's entitled to SMP. No the taxman won't fund it. Statutory Maternity Pay and Leave: employer guide - GOV.UK

    b) no. Of course it doesn't. The only way she'll get SMP is fom you. But as you're already paying a salary for doing sweet fa, and 50% dividends I don't know why you'd bother.

    Time to tighten your belt.
    Don't spend £800+ on one of those fancy prams for start. They're sh*t and a waste of money.
    Or changing tables. They're just an expensive table.


    Oh. and congratulations.
    See You Next Tuesday

    Comment


      #3
      IR35 - Inside or Outside

      If you are deemed :

      - Outside, carry on as normal paying your wife a salary + dividends.
      - Inside, all income received is already taxed, tax inefficient to pay salary, SMP or dividends from taxed income, can continue to pay dividends from retained profits.

      Comment


        #4
        Thank you both.

        Does sound as if she'd be better off starting new job regardless and claiming statutory maternity allowance - nothing to pay from ltd. company, and £139/week for 9 months - providing she has hit the 26 weeks working requirement.

        Belt already tightened - second child so very little to buy (car seat as I was cheapskate and didn't get Isofix for the baby first time around, plus clothes if it's a different sex....)

        Comment


          #5
          Originally posted by Lance View Post
          a) yes. She's entitled to SMP. No the taxman won't fund it. Statutory Maternity Pay and Leave: employer guide - GOV.UK
          ???

          Get financial help with statutory pay - GOV.UK

          As an employer, you can usually reclaim 92% of employees’ Statutory Maternity (SMP), Paternity, Adoption and Shared Parental Pay.

          You can reclaim 103% if your business qualifies for Small Employers’ Relief.

          Comment


            #6
            Originally posted by fiisch View Post
            Belt already tightened - second child so very little to buy (car seat as I was cheapskate and didn't get Isofix for the baby first time around, plus clothes if it's a different sex....)
            Just identify the child as gender neutral and have them wear what you already have!

            Comment

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