paying partner from sole-trader funds.

**MichaelSJD** · 4 October 2011, 14:45

Hi Convict,

Registering as an employer need not be a complicated exercise and can be completed online at HM Revenue & Customs: Register as an employer by email

This would then mean a form P35 and P14's would need to be submitted after the end of each tax year, which would collate all employees payroll figures for the year.

Assuming your partner doesn't already need to submit a tax return this would then avoid the need to register as a self employed person and submit a tax return each year.

As as self employed person you would also need to consider the administration of retaining all sales invoices raised together with expense receipts which would generally not need to be considered if your partner were an employee.

Equally there are considerations to make on both options, however registering as an employer should not be a problematic process.

Useful Sole Trader Book keeping information can be found here: Sole Trader accounts and bookkeeping - a guide - Company Bug

**craig1** · 4 October 2011, 14:53

You could create a partnership (either unlimited or LLP) with a well written partnership agreement. Both self-employed and you can split your profits however you see fit.

I think every post in this forum should have an automatic signature of "I'd strongly advise you to speak to an accountant first though"

**northernladuk** · 4 October 2011, 15:00

Originally posted by convict View Post

Hi,

Long time lurker, now converting to poster.

I'm self employed (sole trader). Obviously I like minimize my tax bill where I can but I want to balance this against time/effort. My other half (not my wife - we're not married) has a small part time job and will not be using much of her yearly tax allowance for this year.

I'd like to pay her for services, but don't want the grief of registering as an employer and having to do her tax etc. Could she also register as self employed and then me pay her for 'services' and then she put this on her self assessment? We're only talking 5-6K/yr. As far as I can work out there's a couple of grand to be saved so it's got to be worth investigating.

Ta,

///C

Does this

Just to add my normal pedantic gotcha on this...

Obviously I like minimize my tax bill where I can

nothing wrong with that so far....

I'd like to pay her for services

Is she providing you any services?? apart from standard smutty comments...

Must be doing one or the other of two things here or you are in deep trouble IMO. You either pay her for the services she carries out which is fine if they do represent the value you are going to pay her. Bookkeeping and answer the phone is not worth 7K a year. I , however, read in to this you are using your wife to reduce your tax liabilities. This is not fine by a long stretch unless you have a perchance for soap and communal showers.

Don't try and kid yourslef you are being clever and will get away with it. It isn't you that has to be convinced in the event of an inspection, it is HMRC. Making up some jobs for your wife so to avoid paying tax will not stick. Do it properly or don't do it at all is my take. Others will be a little bit more relaxed on this topic I am sure but thats my 2 penneth.

**convict** · 4 October 2011, 15:01

Thanks for the responses. I'll have another look at the effort and maintenance of doing PAYE and have another think about it. I'm not sure about the partnership stuff but I'll think about that too.

///C

**Alan @ BroomeAffinity** · 4 October 2011, 15:26

Maybe an obvious one but have you considered converting to a limited company? There are savings to be had here if its done right even on modest income. Mostly these savings would be in NI - ie, done properly, you wouldn't pay any. You'd need to balance that against the (limited) extra work and effort and/or potentially higher accounting costs.

**prozak** · 4 October 2011, 15:39

Originally posted by northernladuk View Post

Just to add my normal pedantic gotcha on this...

Must be doing one or the other of two things here or you are in deep trouble IMO. You either pay her for the services she carries out which is fine if they do represent the value you are going to pay her. Bookkeeping and answer the phone is not worth 7K a year. I , however, read in to this you are using your wife to reduce your tax liabilities. This is not fine by a long stretch unless you have a perchance for soap and communal showers.

I usually like your no nonsense stuff northernlad. But you are going a bit far here.

Deep trouble? Communal showers?

Or maybe if HMRC didn't agree he would be out of pocket a couple of grand?

No laws broken here.

Maybe his name - convict - led you to believe he belonged in gaol?

**northernladuk** · 4 October 2011, 15:50

Originally posted by prozak View Post

I usually like your no nonsense stuff northernlad. But you are going a bit far here.

Deep trouble? Communal showers?

Or maybe if HMRC didn't agree he would be out of pocket a couple of grand?

No laws broken here.

Maybe his name - convict - led you to believe he belonged in gaol?

Well yes I was going to play on that and lost the thread.

To be fair though, deep trouble to me is falling foul of HMRC and getting fined, might be peanuts to others but it is not somewhere I want to be.

Anyway, that was nearly sensible advice, had to be overly melodramatic to spoil it and look like a tit as normal somehow

**convict** · 4 October 2011, 15:54

Originally posted by northernladuk View Post

Well yes I was going to play on that and lost the thread.

To be fair though, deep trouble to me is falling foul of HMRC and getting fined, might be peanuts to others but it is not somewhere I want to be.

Anyway, that was nearly sensible advice, had to be overly melodramatic to spoil it and look like a tit as normal somehow

The point of the post was not missed though

Thanks.

paying partner from sole-trader funds.