Extra income stream and taking wife on as employee

[TechJinx]

Hi all,

Mrs Techjinx has been offered 15 hours a week running the social media accounts of a smallish online business. £10-£15 an hour nothing major but not bad as she's at home with the kids at the moment and its home based.

She's also been offered 1-2 hours tutoring English at £30 and hour when the new term starts. (she's an ex english teacher.)
This will be through a tutoring company one of her teaching friends has set up so will be invoiced to a company rather than cash in hand.

Mrs T currently has a 50% shareholding in my ltd but draws no salary and has no official company post.

Both will require invoicing and so it seemed logical to me to push this through my ltd. Thinking being:

1. With the current push against PSCs multiple income sources can only be a good thing to fudge any implication of "disguised employment" and whatnot.
2. As she has no other income we can pay her a wage and utilise some more tax free limit.
3. The social media stuff can easily be badged as IT consultancy, the company's current description for VAT - not sure what impact having some tutoring in there would have.

I've asked my accountants to comment but I wondered if anyone ran anything similar and if there's anything I'm not considering. Also will I need to get employers liability insurance as she's "a close relative"??

[Jessica@WhiteFieldTax]

As she is 50% shareholder, Employers liability isn't necessary. 50% is critical -49.5% and you would need it.

Re VAT, agree no issues re the social media work - if you are on normal vat then the sector is almost irrelevant, if on flat rate then as the majority income stream is from IT consulting and social media is a sideline, again no change.

Tutoring - as its being supplied via a company I believe will be vattable. If it was being supplied by a sole trader and was a subject normally taught in school / uni then my understanding is it would be outside of VAT. This is a bit of a quagmire, so I am writing here from memory and without research. Gives you an idea of what your accountant should come back with. As its a minor income stream, again see above re vat sector.

Other issues - auto enrolment - contract both of you out?

[d000hg]

My thought is that a couple of hours tutoring a week she might as well bill personally than force it through the Ltd.

[TheCyclingProgrammer]

Pulling the social media stuff into the company and paying your wife a salary seems reasonable but as above I would be inclined to keep the tutoring stuff separate. If she already does a self assessment then filling out a self employed sheet won't take long - you'll want to apply for a small earnings exemption for NIC though.

[fidot]

what if client isn't VAT registered?

Re VAT, agree no issues re the social media work

Apart from making her services 20% dearer, if the client isn't VAT registered.

[Sausage Surprise]

In my experience it's a PITA putting someone else through your books.

[TechJinx]

Thanks for the replies guys

why is it a pain putting someone else through the books?

The company will be VAT registered they're pretty sizable with several employees.

Is the only issue with the tutoring stuff the fact its a totally different business? Is that an issue inside one Ltd where the revenue is small.

For £60 a week I thought it might just be easier to add one extra client on the accountants online portal TBH

[d000hg]

Well your company doesn't provide tutoring services so it just seems a bit fake, like you're just trying to push all income through the Ltd regardless of the source.

Did you already say whether the company she bills for tutoring is VAT registered also?

[TechJinx]

Thanks for the replies guys

why is it a pain putting someone else through the books?

The company will be VAT registered they're pretty sizable with several employees.

Is the only issue with the tutoring stuff the fact its a totally different business? Is that an issue inside one Ltd where the revenue is small.

For £60 a week I thought it might just be easier to add one extra client on the accountants online portal TBH

It will be yes.

Going back to brass tacks I thought the aim of a director was to make a company as profitable as possible. Surely extra revenue streams whatever the trade are valid as they increase the profitability of the company.

Just a thought