Tax Allowable Expense?

jilt

Went to see a new client last night, he works part time and works from home the rest of the week as an architectural technician. His brother in law (makes a change from the man in the pub!) has told him that he can claim an amount for his wife's input, eg answering the phone etc when he's at work and helping with a bit of paperwork.

Failing his wife raising an invoice for services rendered or my client employing her, is anyone aware of any tax allowable expense he could claim? He does not actually want to pay her anything just reduce his tax bill. Just thought I'd call on the knowledge of the experienced MIP's :tongue_smilie:

groundy

He can pay her a salary as long as it is commercially viable that a non related person would expect to receive the same salary. Or he could make her a partner in the business.

Other than that I am not aware of any allowances.

AK002

If she raises an invoice she will need to be registered as self employed with HMRC.

Does his wife do anything else (i.e. work somewhere else?)

jilt

Many thanks for your replies, he seemed to think that I could just put a figure in his accounts, not for him not actually pay anything out just to incease his expenditure and reduce his tax.

I have explained that he either pays her by way of an invoice from her, then she would have to be self employed as well and therefore pay the tax on it, she is employed, which defeats the object, or he would have to sent up a PAYE scheme and employ her.

I presume everyone gets clients telling them that they have a relative/friend/man in the pub who's accountant has put through this that and the other, and can't understand why you refuse to do the same :001_rolleyes:

Psyche

Er, sorry, if he pays her something then that is an actual expense, but if he pays zero for the service then the deduction is also zero.

claudialowe

The only way that it would work if was if the wife had no other job. She could then complete a P46 saying that it was her only job. So long as her "earnings" were under the LEL then a PAYE scheme would not need to be set up. At any inspection, the Inspector would want proof of what she actually did for the business, and also seeing that exact amount being transferred from the business account to either her sole account or a joint account.

Surely though (depending on her age) a much better idea would be to set up a PAYE scheme on their behalf, pay a salary (as detailed above) above the LEL but below the ET. There is still no tax or NI to physically pay, but they clock up years for pension entitlement. You can submit a nil payslip online at the revenue website, and just need to complete a P60 each April. They get a future benefit, and you get money for old rope each year end.

Simples :thumbup::thumbup:

This is of course only works so long as the wife has no other earnings.

Claudia