employee of own partnership business

Allie

Hi

This many sound a bit of strange one but is it ok to be an employee of your own self-employed partnership. One of my clients is currently being paid as an employee (ie tax & nics taken at souce) of her business which is a partnership of 2 - my client & her husband. Or should she just be self employed and complete a self assessment with her share of the profit from the business.

Any suggestions/reasonings etc will be gratefully appreciated

JodieR

wrong wrong wrong! if she's a partner then she'll be taxed on a percentage of the partnership profits. The partnership will complete a partnership return which apportions the profits and then her share will be shown on the partnership pages of her tax return. She shouldn't be an employee at all.

Allie

Many thanks Jodie I thought this was the case but sometimes you just need to talk or in this case 'write' to someone for re-assurance

Monsoon

Another vote for wrong wrong wrong!!
If she is an employee, she is not a partner. If she is a partner, she is not an employee.

At a wild guess, it's more tax efficient for her to be a partner than an employee but it all (f course) depends on the numbers