Reply to: Hire wife as trainee

[northernladuk]

Yeh - this is something we want to do anyway and when qualified she'd likely be hired by My Ltd and be billable through it, so the thought occurred to me that the training part could be borne in part by My Ltd too.

Not sure if it's been mentioned but remember direct training costs to learn a new skill are not deductible, courses etc. Paying her while she is training is allowable if you can justify it.

If this is genuine then I wouldn't worry about it. People do far worse

This is the bottom line really. As long as you not outright taking the piss then you'll probably be good. Don't let apathy get in the way though. If she decides not to bother or doesn't do anything you can't evidence then the situation changes to blatant piss take. Do what you say in good faith then you good to go. HMRC will have plenty to chew on with people abusing the 24 month rule, travelling expenses and just general expenses if this weeks posts are anything to go by!

[cannon999]

Yeh - this is something we want to do anyway and when qualified she'd likely be hired by My Ltd and be billable through it, so the thought occurred to me that the training part could be borne in part by My Ltd too.

If this is genuine then I wouldn't worry about it. People do far worse

[meanttobeworking]

He did say in post 6 she is a shareholder to be fair. Guess this was exploring ways of going beyond this with a wage and expenses etc.

Yeh - this is something we want to do anyway and when qualified she'd likely be hired by My Ltd and be billable through it, so the thought occurred to me that the training part could be borne in part by My Ltd too.

[northernladuk]

Why not just give her 50% of the shares and let her have the dividends if you want to be tax efficient?

He did say in post 6 she is a shareholder to be fair. Guess this was exploring ways of going beyond this with a wage and expenses etc.

[cannon999]

Why not just give her 50% of the shares and let her have the dividends if you want to be tax efficient?

[northernladuk]

What would you say the difference is between the two arrangements though? Both involve someone with zero experience. Both involve payment of a modest salary for which the Ltd receives a small tax break. One costs the government circa £15k, the other costs them circa nothing. Yet the one that costs the government more seems to feel legit, whilst the one that doesn't seems not to.

As I've said above, I'm not looking for someone to reassure me it's all ok if it isn't. This post comes from a motivation to get things right, not to try and get away with something wrong. I'm looking for someone to put into words what's wrong with one that isn't wrong with the other. But nobody can (yet). I'm starting to think that perhaps either arrangement would give me the same uneasiness because it's someone known to me, rather than a stranger.

I think the difference is an apprentice works directly with everyone else albeit on a training path but still hands on. Just training in the background isn't hands on. The sweetener is to get business over the hurdle that having an apprentice takes time away from the person actually doing the work which could obviously be considered a hinderance to most business from the outset. You case is very grey as she isn't an apprentice, she's just learning on company money. If she was shadowing you and coming on the client work etc it would be a lot more clear cut.

Lance kinda nails it. If there is a business need it all slots together nicely. If there isn't then it gets complex and can start pushing boundaries as is the case here.
Business really have to have apprentices for long term resources to grow as well as doing their bit before you suggest there is no business need for them.

[Lance]

What would you say the difference is between the two arrangements though? Both involve someone with zero experience. Both involve payment of a modest salary for which the Ltd receives a small tax break. One costs the government circa £15k, the other costs them circa nothing. Yet the one that costs the government more seems to feel legit, whilst the one that doesn't seems not to.

As I've said above, I'm not looking for someone to reassure me it's all ok if it isn't. This post comes from a motivation to get things right, not to try and get away with something wrong. I'm looking for someone to put into words what's wrong with one that isn't wrong with the other. But nobody can (yet). I'm starting to think that perhaps either arrangement would give me the same uneasiness because it's someone known to me, rather than a stranger.

It's like many of the things that a small company cannot do but a large company can. The scale of the business changes things.
A large company putting a junior consultant through an MBA is OK.
A PSC putting its owner through an MBA is definitely not OK.
The difference being the scale, and the recipient of the benefit.

Who's to say that what you suggest is going to cause problems? The thing is HMRC won't bat an eyelid if you're a 50+ company and get a few juniors on an apprentice. But you're not, and you're not proposing that.
They might bat more than an eyelid and look a lot closer.

For me, I'd prefer to avoid the gaze of HMRC entirely. Not because I'm doing anything wrong, but because I don't have time to deal it.

You could find out that you're absolutely fine doing what you propose. But it might take 2 years and involve a deep investigation of the last 6 years of your business.

[meanttobeworking]

shady? You mean too good to be true?

What would you say the difference is between the two arrangements though? Both involve someone with zero experience. Both involve payment of a modest salary for which the Ltd receives a small tax break. One costs the government circa £15k, the other costs them circa nothing. Yet the one that costs the government more seems to feel legit, whilst the one that doesn't seems not to.

As I've said above, I'm not looking for someone to reassure me it's all ok if it isn't. This post comes from a motivation to get things right, not to try and get away with something wrong. I'm looking for someone to put into words what's wrong with one that isn't wrong with the other. But nobody can (yet). I'm starting to think that perhaps either arrangement would give me the same uneasiness because it's someone known to me, rather than a stranger.

[northernladuk]

shady? You mean too good to be true?

No.. Slim.

[Lance]

That's the weird thing. There's a government scheme which allows me to take someone with zero experience on, and the government will pay their training costs up to £15,000, and they insist I pay them a wage (which would be tax deductible).

But if I take them on on my own and do the same thing, if somehow feels shady.

shady? You mean too good to be true?

[meanttobeworking]

I've no idea. Just a thought that popped in to my head that might be worth looking at to save some money.

That's the weird thing. There's a government scheme which allows me to take someone with zero experience on, and the government will pay their training costs up to £15,000, and they insist I pay them a wage (which would be tax deductible).

But if I take them on on my own and do the same thing, if somehow feels shady.

[northernladuk]

Out of genuine interest… how would you say this changes anything? I’d still have to pay her a salary (and get the small tax break), and the government would be down £14,250 for her training. But yet somehow it seems more legit ?

I've no idea. Just a thought that popped in to my head that might be worth looking at to save some money.

[meanttobeworking]

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.

Out of genuine interest… how would you say this changes anything? I’d still have to pay her a salary (and get the small tax break), and the government would be down £14,250 for her training. But yet somehow it seems more legit ?

[northernladuk]

I hate it when you're right

It isn't bloody often so won't be too much of a problem

[meanttobeworking]

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

This looks excellent, thanks