Self employed and paying my wife

Discussion in 'Accounts & Finance' started by SmithyBoy, Sep 10, 2020.

  1. SmithyBoy

    SmithyBoy UKBF Newcomer Free Member

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    Hi everyone! I'll try to keep it brief, I'm a sole trader and my wife helps out on the business - she also has a part time job. In the 2019-20 tax year I made a profit of about £40k. My wife earned about £8,500 through her part time job. I paid her £3,500 from the business. My accountant vaguely said not to worry about proper payroll since she's below the £12.5k personal allowance. Is that right? Do I just include the £3.5k as an expense and be done with it?

    Thank you kindly,

    Will
     
    Posted: Sep 10, 2020 By: SmithyBoy Member since: Sep 10, 2020
    #1
  2. Newchodge

    Newchodge UKBF Big Shot Free Member

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    No it is completely and utterly wrong.

    If she has another job you must run payroll. If your accountant was aware that she had another job I would suggest you consider getting a new accountant.
     
    Posted: Sep 10, 2020 By: Newchodge Member since: Nov 8, 2012
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  3. SmithyBoy

    SmithyBoy UKBF Newcomer Free Member

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    Hmm... lol, I can't say this surprises me one bit. I thought that might be the case. Not the first time something like this has happened. Time to go accountant shopping again! Do you think a call to HMRC could sort this out?

    Thanks for the reply!

    Will
     
    Posted: Sep 10, 2020 By: SmithyBoy Member since: Sep 10, 2020
    #3
  4. Szymon Krzyzanowski

    Szymon Krzyzanowski UKBF Newcomer Free Member

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    This!
     
    Posted: Sep 10, 2020 By: Szymon Krzyzanowski Member since: Aug 21, 2020
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  5. MyAccountantOnline

    MyAccountantOnline UKBF Legend Full Member

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    Not defending your accountant but I wonder if he/she was aware your wife had another job? However telling you you don't have to do 'proper payroll' just because shes below the £12.5k threshold isnt correct anyway.

    HMRC explain when you need to register as an employer here

    You need to register as an employer and send the outstanding reports to them asap.

    I'd suggest to your accountant that they sort this out for you free of charge and pay any penalties due.
     
    Posted: Sep 10, 2020 By: MyAccountantOnline Member since: Sep 24, 2008
    #5
  6. MyAccountantOnline

    MyAccountantOnline UKBF Legend Full Member

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    Probably not I'd register as an employer and submit the outstanding reports asap.
     
    Posted: Sep 10, 2020 By: MyAccountantOnline Member since: Sep 24, 2008
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  7. SmithyBoy

    SmithyBoy UKBF Newcomer Free Member

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    He definitely knows about her other job. Just having a look on that site it says "You do not need to register for PAYE if none of your employees are paid £120 or more a week, get expenses and benefits, have another job or get a pension. However, you must keep payroll records.". Could that be what my accountant is referring to?
     
    Posted: Sep 10, 2020 By: SmithyBoy Member since: Sep 10, 2020
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  8. MyAccountantOnline

    MyAccountantOnline UKBF Legend Full Member

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    Posted: Sep 10, 2020 By: MyAccountantOnline Member since: Sep 24, 2008
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  9. Newchodge

    Newchodge UKBF Big Shot Free Member

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    If that is what they were thinking about they are unable to read.
     
    Posted: Sep 10, 2020 By: Newchodge Member since: Nov 8, 2012
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  10. SmithyBoy

    SmithyBoy UKBF Newcomer Free Member

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    Lol well that wouldn't surprise me to be honest. Actually, just thinking, she wasn't employed (at the other job) for the full tax year. Could that impact it? Either way I don't think there would be any additional tax / NI liability so hopefully this is just a paperwork thing. Thanks for your help everyone! I'll get back to my accountant better armed than I was before :).

    Will
     
    Posted: Sep 10, 2020 By: SmithyBoy Member since: Sep 10, 2020
    #10
  11. MyAccountantOnline

    MyAccountantOnline UKBF Legend Full Member

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    I don't think its as clear as it could be and did actually mean to give you the other link which is much clearer.

    I don't know what your accountant was referring to but as you are employing someone with another job you need to be registered as an employer.
     
    Posted: Sep 10, 2020 By: MyAccountantOnline Member since: Sep 24, 2008
    #11
  12. MyAccountantOnline

    MyAccountantOnline UKBF Legend Full Member

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    Did she have another job when she started working for you?

    If you are going to discuss it with your accountant do also ask them to advise you on the most tax efficient salary for her based on her current circumstances.
     
    Posted: Sep 10, 2020 By: MyAccountantOnline Member since: Sep 24, 2008
    #12
  13. SmithyBoy

    SmithyBoy UKBF Newcomer Free Member

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    Yes, although she stopped working at that job a few months before the end of the tax year. Cheers again!
     
    Posted: Sep 10, 2020 By: SmithyBoy Member since: Sep 10, 2020
    #13
  14. KAC

    KAC UKBF Ace Free Member

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    Would still suggest doing some accountant shopping :(
     
    Posted: Sep 10, 2020 By: KAC Member since: May 7, 2017
    #14