NI requirement

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Nick

Joined: 02 Nov 2004
Posts: 34535
Location: Hereford

Posted: Sun Jun 01, 14 11:51 pm Post subject: NI requirement
If I wish to pay someone to work for me, because it will save me paying tax, what are the things to consider? Clearly, he'd have to pay tax at the appropriate rate, but does he or I have any NI contributions to consider. He'd be paid around ï¿½6,000 a year, and this would be his sole income.

Rob R

Joined: 28 Oct 2004
Posts: 31902
Location: York

Posted: Mon Jun 02, 14 12:05 am Post subject:
Is he to be employed or self-employed? I presume employed, as it's his sole income, in which case he'll be getting less than the ï¿½153/week threshold for NI. However, he may wish to pay voluntary contributions to maintain his entitlement to benefits including state pension. If he's over state pension age, he doesn't need to pay any NI contributions.

Nick

Joined: 02 Nov 2004
Posts: 34535
Location: Hereford

Posted: Mon Jun 02, 14 12:24 am Post subject:
It's my son. He's still at school. I have an income from a property, and pay 40% tax on the 'profit' from it, and the remainder goes to pay bills. I do some work on the property, and son helps, for which he doesn't get paid (roof over his head, access to my beer fridge, etc, etc). If I paid him, I'd keep the 40%, and he could pay the bills. Am I missing anything?

Mistress Rose

Joined: 21 Jul 2011
Posts: 16005

Posted: Mon Jun 02, 14 7:01 am Post subject:
He would have full rights like minimum wage, paid holiday, sickness pay, and from 2017 you would have to set up a pension scheme for him, sooner if you employ more than just a few people.

Rob R

Joined: 28 Oct 2004
Posts: 31902
Location: York

Posted: Mon Jun 02, 14 9:52 am Post subject:

Nick wrote:

It's my son. He's still at school. I have an income from a property, and pay 40% tax on the 'profit' from it, and the remainder goes to pay bills. I do some work on the property, and son helps, for which he doesn't get paid (roof over his head, access to my beer fridge, etc, etc).

If I paid him, I'd keep the 40%, and he could pay the bills.

Am I missing anything?

Interviews? There might be a better candidate out there... (sounds like a good job to me). Plus all the stuff Mistress Rose said, of course.

Nick

Joined: 02 Nov 2004
Posts: 34535
Location: Hereford

Posted: Mon Jun 02, 14 10:06 am Post subject:
The last thing a 17 year old living at home in full time education needs is sick pay and holiday pay!

chez

Joined: 13 Aug 2006
Posts: 35935
Location: The Hive of the Uberbee, Quantock Hills, Somerset

Posted: Mon Jun 02, 14 10:08 am Post subject:
Can you talk to your accountant about it? Ours is really helpful about that sort of thing.

onemanband

Joined: 26 Dec 2010
Posts: 1473
Location: NCA90

Posted: Mon Jun 02, 14 10:19 am Post subject:
That's some beer fridge if it equates to ï¿½6k a year ï¿½6k(just labour?)per year sounds a lot to maintain one property. Or does job cover other things ? Even if son only works for you I can't see why it couldn't be done on a self-employed basis if each job is done on a price.

Treacodactyl
Downsizer Moderator

Joined: 28 Oct 2004
Posts: 25795
Location: Jumping on the bandwagon of opportunism

Posted: Mon Jun 02, 14 10:27 am Post subject:
It's sounding a bit like tax avoidance to me. Is there any possibility to transfer ownership of part of the property to son so he'd get some of the rental income? That might help later for IHT purposes but would need good legal advice.

tahir

Joined: 28 Oct 2004
Posts: 45676
Location: Essex

Posted: Mon Jun 02, 14 11:45 am Post subject:

Treacodactyl wrote:

Is there any possibility to transfer ownership of part of the property to son so he'd get some of the rental income? That might help later for IHT purposes but would need good legal advice.

Prolly a good idea

Rob R

Joined: 28 Oct 2004
Posts: 31902
Location: York

Posted: Mon Jun 02, 14 11:48 am Post subject:
You can transfer up to ï¿½30k in any one year before Capital Gains kicks in (providing you live for a further 7 years after the transfer).

Nick

Joined: 02 Nov 2004
Posts: 34535
Location: Hereford

Posted: Mon Jun 02, 14 11:48 am Post subject:

Well. It is tax avoidance. I've already lost 40% of the cash before we bought the place and they want a further 40%. My priorities are to ensure financial security for my kids. I don't make much of an apology for that.

As for transferring it to him, he's only 17 so not yet.

It more than a beer fridge. It's a room with bathroom in a house with full access to every other room, the freezer, all meals, bills, clothes and taxis thrown in. Also, we supply a holiday or two every year and complete laundry services.

You don't have kids, do you?

Nick

Joined: 02 Nov 2004
Posts: 34535
Location: Hereford

Posted: Mon Jun 02, 14 11:54 am Post subject:
We don't have an accountant. My life is very simple. Mostly I'm paye plus rental income an the tax return is simple. Just wondered if I'm missing a trick and it appears I am. We did have an accountant once. He charged ï¿½500 to fill in the form for me but I had to provide all the figures. He offered no advice. More of a robbing bastard, than an accountant, tbh.

Nicky cigreen

Joined: 25 Jun 2007
Posts: 9887
Location: Devon, uk

Posted: Mon Jun 02, 14 12:16 pm Post subject:

as i understand it, the pay will be less that the NI thresholds for both employers and employees NI - but you would still need to issue payslips and do the PAYE system, including a year end submission etc. All relatively easily - I think I would start by contacting linland revenue and asking how to proceed. I do wonder if you would be obliged to have employers liability insurance or the like....(dunno how the law stands on this)

Alternatively son could invoice you for his time - he would be self employed, and could fill in a form to not pay NI due to low income,and would have to submit tax return but wouldn't pay any tax due to being below tax allowance. If he only has the one customer (you) IR might not accept this..
again i would phone inland revenue and talk it over.

john of wessex

Joined: 18 Jun 2007
Posts: 2130

Posted: Mon Jun 02, 14 1:09 pm Post subject:
My brother employs his wife in his business. Its the sort of arrangement that HMRC look at very hard So I'd say be very careful You could transfer the property to a trust so your son can have the income but not access to the capital. I would be inclined to make it a discretionary trust in case he needs to claim a means tested benefit

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