I'm thinking of employing someone to help me out with a big wedding shoot, possibly my son who is a student. What will it mean for my accounts? - part 1 of 1 2

Published 01/10/2010

A: The simple answer is that you have an additional expense to show that reduces your profits and therefore your tax bill. Unfortunately you will need to know the long answer, and it's a bit more complicated.

When someone does some work for you directly in this way it is no different than paying for other services. You would claim, say, printing expenses, and there is no difference here.

As long as it's a business expense, helping set up the shoot, carrying bags etc, then the whole amount paid should be allowed in your accounts. You won't get the full amount back, but you will pay less tax, equivalent to the cost at your top rate of tax. (That, of course, applies to any expense.)

Another point to note; the person you pay will be liable to tax. This will not be a problem if the person is registered self employed. He or she will simply include the income in their accounts.

In a lot of cases this will not apply, especially for temporary assistance.

If this happens, the question to ask is whether it's a temporary arrangement. If it's a one-off, less than a week, you can simply treat it as a normal expense. (Whoever you pay may need to declare it as untaxed income though.)

On the other hand, if it becomes a regular occurrence, and you pay more than £97 a week, you may need to set up a PAYE scheme. This gives you employer obligations, such as deducting Tax and National Insurance, the minimum wage and holiday entitlements. The exact rules are complex, so I'd advise speaking to an accountant if you are unsure.

As for employing your son, or any member of your family, there's nothing to stop you. There are no rules about who you can or cannot pay to work for you, as long as you treat them in exactly the same way as a non-family member. This of course means you could employ your husband or wife or son. I'd advise a bit of caution though. The Revenue knows how easy it is to 'fudge' accounts by including payments to family members to save tax. Of course this is illegal, and if they look into your accounts and see you have employed a relative they will demand detailed records of the work done.

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1st Published 01/10/2010
last update 07/04/2022 09:10:23

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