March 2. 2016
Telephone calls and paperwork! And all you want to do is go
out and do what you are good at – teaching people to drive. Why not ask a
family member to manage your diary, take telephone calls and more importantly
keep your accounting records up to date? There is nothing like having a free
administration service on hand when you need it.
But is having your family member work for free the best way?
Not necessarily and it can benefit you as a self-employed individual if you
‘pay’ someone to run your ‘office’ and keep your paperwork in order as the cost
is tax deductible against your trading income.
However, in the complex labyrinth of UK tax rules,
regulations and do’s and don’ts, paying someone is not as straight forward as
you would think:
-You must pay the person the average hourly ‘going rate’ for
the type of work they carry out;
-You have to consider whether the person already receives
any other form of taxable income. If
they do, the addition of your ‘pay’ may push their total income over the
taxable limit and they could end up having to register for self-assessment and
paying tax themselves on this new income;
-There has to be a paper trail of payment. This is one of the areas HMRC will look into
closely if you are ever unlucky enough to be picked for an investigation,
specifically transactions between family members.
Paying a family member to help you out could open a can of
worms and could prove quite costly if it not administered correctly but done
properly is a good way to reduce your tax bill.
If in doubt, ask! 0344 984 4445