My wife has started (in her own time) to learn to code (HTML/CSS/JS), and has an interest in UX principles. She has the ambition to (and I believe she has the potential to) become a competent Front End Developer.
My Ltd (I am currently the only employee) offers consultancy in Business Analysis / Product Owner roles for digital projects, and I have daily interactions with clients who need Front End Developers, and I also work with existing developers on projects. Once she becomes appropriately skilled, I will likely have opportunities to place her in small roles, as and when opportunities present themselves in the course of my normal business, and she may also be able to source her own leads. There is however no guarantee this will happen, and there is certainly not likely to be a steady stream of work for her.
I am considering employing her as a trainee. This would mean I could pay her a modest salary whilst she trains, with the intention being that once she has a suitable skill set, she can start to do billable work for My Ltd. Clearly this has a financial advantage to us as a) My Ltd would pay less CT, and b) costs of her training could be tax deductible.
Would this arrangement be seen as reasonable by the tax man?
Would I employ a stranger under the same terms? No.
Would her salary contribute towards our collective expenses, meaning that as a whole we are extracting money from My Ltd in a more tax-efficient way? Yes.
Would she be spending substantial time learning and developing her skills? Yes.
Would I be mentoring her and helping her with her training? Yes.
Is the possibility of her eventually becoming a billable resource in My Ltd real or a sham? Real.
In my old age, I've become so paranoid about being caught on the wrong side of one investigation or another, I'm now at a point where even if my accountant is telling me it's fine (which he has), I still worry that I'm doing something that's going to get me in hot water.
My Ltd (I am currently the only employee) offers consultancy in Business Analysis / Product Owner roles for digital projects, and I have daily interactions with clients who need Front End Developers, and I also work with existing developers on projects. Once she becomes appropriately skilled, I will likely have opportunities to place her in small roles, as and when opportunities present themselves in the course of my normal business, and she may also be able to source her own leads. There is however no guarantee this will happen, and there is certainly not likely to be a steady stream of work for her.
I am considering employing her as a trainee. This would mean I could pay her a modest salary whilst she trains, with the intention being that once she has a suitable skill set, she can start to do billable work for My Ltd. Clearly this has a financial advantage to us as a) My Ltd would pay less CT, and b) costs of her training could be tax deductible.
Would this arrangement be seen as reasonable by the tax man?
Would I employ a stranger under the same terms? No.
Would her salary contribute towards our collective expenses, meaning that as a whole we are extracting money from My Ltd in a more tax-efficient way? Yes.
Would she be spending substantial time learning and developing her skills? Yes.
Would I be mentoring her and helping her with her training? Yes.
Is the possibility of her eventually becoming a billable resource in My Ltd real or a sham? Real.
In my old age, I've become so paranoid about being caught on the wrong side of one investigation or another, I'm now at a point where even if my accountant is telling me it's fine (which he has), I still worry that I'm doing something that's going to get me in hot water.
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