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Hire wife as trainee

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    Hire wife as trainee

    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.

    #2
    If the trainee wasn't your wife, what would you do differently?




    EDIT: And did you ask the same questions of your accountant as you did here?

    Comment


      #3
      Would I employ a stranger under the same terms? No.
      That kills it for me personally but I can see some logic here. It's certainly better than paying the wife for 'admin duties' but I think you need to forget about trying to justify her learning and focus on the tax element and what you are trying to achieve first. It does sound plausible but personally this is all a step too far for me. It has the potential to stand up to some basic scrutiny but you'll always know yourself it's a bit of a sham. Anyway...

      What are your real reasons for putting her on the books? Are you hoping the company can pay for training at a discount (which you can't as it's a new skill)? You say she is doing it in her own time, does that mean she is already employed? If she is then it may not very tax efficient to pay her from the LTD. If you really want to extract the money even if it's not efficient then you can focus on the technicalities of whether you can put her on the books.
      If you really do want to help her learn and not bothered about the tax element would it be worth looking in to putting her on as an apprentice?

      If this is purely a tax shuffle and she's not otherwise employed then just put her on the books as per the Arctic case rather than making up excuses?

      P.s. you are not an employee of your LTD company.
      'CUK forum personality of 2011 - Winner - Yes really!!!!

      Comment


        #4
        Originally posted by ladymuck View Post
        If the trainee wasn't your wife, what would you do differently?
        I would expect a stranger to already have the skills because I have no motivation to fund a stranger's development. I trust my wife, and want to help her achieve her goals. I will do so regardless, but I'm exploring if there's a legitimate way to do this in a more tax-efficient way. The government recognises that people need to be trained for jobs, and under different circumstances would pay £15,000 (well, 95% of it) for an apprenticeship for someone with no prior knowledge of coding to become a software development technician. So I'm just exploring if similar principles apply in my proposal.


        Originally posted by ladymuck View Post
        EDIT: And did you ask the same questions of your accountant as you did here?
        Yep. He said that if she's contributing to the business, or being trained for a role in which she can contribute in the future, and the wage is commensurate with that, then it's acceptable.


        In case you think otherwise, I'm not trying to get away with anything that's not legitimate. Quite the opposite.

        Comment


          #5
          Originally posted by meanttobeworking View Post
          Would I employ a stranger under the same terms? No.
          Then how would any expenses related to her meet the wholly and exclusively test?

          Comment


            #6
            Originally posted by northernladuk View Post

            That kills it for me personally but I can see some logic here. It's certainly better than paying the wife for 'admin duties' but I think you need to forget about trying to justify her learning and focus on the tax element and what you are trying to achieve first. It does sound plausible but personally this is all a step too far for me. It has the potential to stand up to some basic scrutiny but you'll always know yourself it's a bit of a sham. Anyway...

            What are your real reasons for putting her on the books? Are you hoping the company can pay for training at a discount (which you can't as it's a new skill)? You say she is doing it in her own time, does that mean she is already employed? If she is then it may not very tax efficient to pay her from the LTD. If you really want to extract the money even if it's not efficient then you can focus on the technicalities of whether you can put her on the books.
            If you really do want to help her learn and not bothered about the tax element would it be worth looking in to putting her on as an apprentice?

            If this is purely a tax shuffle and she's not otherwise employed then just put her on the books as per the Arctic case rather than making up excuses?

            P.s. you are not an employee of your LTD company.
            It's the bit that makes me very wary too.

            What I'm trying to achieve is to help her become what she wants to be. I have an Ltd and inroads into the industry. I've looked into the apprentice route quite a bit. If I take her on as an apprentice (before the end of this week!) then the government will give My Ltd a £3,000 incentive payment, as well as the usual arrangement of paying 95% of the £15,000 apprenticeship training costs, but we've ruled this route out because in all conscience I couldn't provide her with the on-the-job training a standard employer would be able to offer. If I was trying to do a sham and it was all about the tax, I wouldn't care about that and I'd just bank the £3,000.

            This is absolutely not a tax shuffle or an excuse - but if there's a way to do it tax efficiently, then I'm keen to find it. She isn't employed elsewhere but she's a shareholder. In the back of my mind I remember the 'can't claim for new skills training' but had forgotten in the moment - so thanks for the reminder.

            Last edited by meanttobeworking; 28 September 2021, 12:08. Reason: made the bit about what the government would pay a bit clearer

            Comment


              #7
              Originally posted by jamesbrown View Post

              Then how would any expenses related to her meet the wholly and exclusively test?
              As per conversation with NLUK, I couldn't claim her training costs anyway, but yes, agreed.

              Comment


                #8
                Originally posted by northernladuk View Post

                P.s. you are not an employee of your LTD company.
                Arg you know what I mean

                Comment


                  #9
                  What I'm trying to achieve is to help her become what she wants to be.
                  Well IMO do that then and forget the LTD just for now. All the LTD adds at this point is a tax break which has you worrying and us posters disagreeing etc. So just forget it.

                  Get her training, do the right thing and forget about pennies. Give it six months, a year and when she has better skills re-visit the LTD and see if she is now much closer to adding value and the answer will be black and white.

                  If she sticks with it and it's not just a fad then your path will be much clearer.

                  And if she isn't employed then just take her on as everyone else does when they use the wife as a tax mule. It's allowed as per the Arctic case so just do it anyway. Don't and complexities in around the training muddy the waters.
                  'CUK forum personality of 2011 - Winner - Yes really!!!!

                  Comment


                    #10
                    If she's interested in UX, I received a marketing email for this course earlier today:
                    https://purplegriffon.com/courses/ot...-ux-foundation

                    Comment

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