From 1 man band to an 'employer'

[ladymuck]

My apologies, I did not list every detail of all the conversations I've had so in summary:

Yes, my accountant did bring up IR35. When he gets a contract, it will be reviewed as all my contracts are and appropriate measures will be taken.

Yes, I have insurance and I have double-checked that it covers my OH too. I will also extend PCG membership to cover us both.

Yes, I trust his work. He has a similar work ethic to me.

I appreciate that we may not last together forever but he's put up with me (and I him) for 10 years now - much more than many marriages but less than my parents (them being in their 40th year). I am not a fortune teller but I do plan for the worst and hope for the best in pretty much all aspects of my life.

There will be no marriage proposals. Girly behaviour or not, he's dumped if the diamond and platinum ring I've got my eye on comes with strings attached.

On a more serious note, thanks for all your comments.

[Sockpuppet]

Tell him to stop being a girl and propose.

Then after that tell him to become and employee and a director where NMW and Holidays don't apply.

[SackmanandCo]

probably easier to set up a separate limited company. if paying full salary, then no IR35 issue.

[Stag Cozier]

Well, I had a good chat with my accountant about this. He was bemused that someone was willing to hand over so much to HMRC!

We came up with a plan which is quite logical and simple. There will be a charge-out rate (which the client/agency pays) and a salary rate (which my OH gets paid). The difference would cover employers NI and expenses, etc with any 'profit' payable to him as a bonus at year end.

My accountant mentioned that this would also help shore up the legitimacy of my company. So, this may be a suitable route for anyone else wanting to do the same.

When represented with the facts of the true cost of the non-director/non-divvy route, my OH saw the light and is now willing to concede that I was right all along.

What happens if you and your OH split and for some reason the work carried out was rubbish. Your limited company would be left with the bill so make sure you have insurance. Do you trust the work he does?

IMHO your options should be:

1. OH goes brolly.
2. Setups his own limited company.

[zedAccounts]

Well, I had a good chat with my accountant about this. He was bemused that someone was willing to hand over so much to HMRC!

Did your accountant bring up the subject of IR35? If not, he should have. If he did make sure your OH's contracts & working practices fall outside IR35 before you start paying him dividends.

ZED.

[Sally BFCA]

My accountant mentioned that this would also help shore up the legitimacy of my company. So, this may be a suitable route for anyone else wanting to do the same.

Legitimacy? If this is in reference to IR35 status, then it is each assignment that is assessed uniquely. How many employees or clients your company has will not have an effect if one particular contract was found to be inside IR35.

A limited company is required by law to have Employer's liability insurance if there is more than one employee, so if not already in place you would need to get some. You may also want to check out your policy (if applicable) for professional indemnity.

Lastly, this may be a daft question, but, has your OH had their contract professionally reviewed to say it is caught by IR35? No point paying the tax man more than you have to

[ladymuck]

Just in case this is useful...

Well, I had a good chat with my accountant about this. He was bemused that someone was willing to hand over so much to HMRC!

We came up with a plan which is quite logical and simple. There will be a charge-out rate (which the client/agency pays) and a salary rate (which my OH gets paid). The difference would cover employers NI and expenses, etc with any 'profit' payable to him as a bonus at year end.

My accountant mentioned that this would also help shore up the legitimacy of my company. So, this may be a suitable route for anyone else wanting to do the same.

When represented with the facts of the true cost of the non-director/non-divvy route, my OH saw the light and is now willing to concede that I was right all along.

[zedAccounts]

If I was your OH I would take the umbrella route for the sake of simplicity and peace of mind. I would be reluctant to allow my pay to end up in someone else's company and not have a share or say in that company. It could get messy if the two parties fall out.

ZED.

[ladymuck]

I am the sole director of my Ltd Co, and he doesn't want to be a director. As we're not married, I'm not sure income shifting will apply to us? Another question for the accountant.

I don't mind doing the admin, I just want to make sure I get it right. If it means giving some of his hard-earned away to an umbrella company then so be it, but part of me is reluctant to do so if I can sort it out in a legal and uncomplicated way.

Thanks for the tips, and I'll have a search for that thread to as there could be a couple of gems in there that are relevant.

[SueEllen]

There is a another thread about am month old asking a question about a hub/wife ltd and asking about what to do if income is different and apportioning divis. It will be a very interesting thread as there are lots of warnings about thresholds, income shifting and so on. It would appear that the answer to the problem would have been to run the two completely seperately. I had a quick look but can't remember the title. Worth a search IMO....

LadyMuck's question is different to the one on that thread.

She has the difficultly that she is suppose to give the hubby holiday pay etc if he is an employee.

If she is acting as an umbrella company then it's a more difficult situation and he is probably better of going through a proper umbrella company.

[northernladuk]

There is a another thread about am month old asking a question about a hub/wife ltd and asking about what to do if income is different and apportioning divis. It will be a very interesting thread as there are lots of warnings about thresholds, income shifting and so on. It would appear that the answer to the problem would have been to run the two completely seperately. I had a quick look but can't remember the title. Worth a search IMO....

[Alan @ BroomeAffinity]

Best watch that the two incomes don't take you above the VFRS threshold as well.

[Stag Cozier]

What's your company setup? Are you both directors? Is he the only worker or are you both workers? Is he the hubster or simply partner?

There's nothing wrong with calculating an IR35 deemed payment every month. In fact, I would say that's the correct way to do it rather than wait until the end of the tax year.

[ladymuck]

My OH is about to enter the heady world of contracting and we've agreed that he can operate through my Ltd Co. He's pretty risk adverse when it comes to tax matters so wants me to do full PAYE/NI deductions as if IR35 caught.

My only concern is that I'll be acting more like an umbrella company than an employer in that he'll also be paying employers NI and I'll have to do some jiggery pokery with expenses.

I'll be quizzing my accountant about the best way to deal with it all but I was just wondering if anyone has any experience in doing this and what pitfalls I should look out for.

Thanks!