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March 2. 2016

Will someone please answer the phone?

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

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