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I am in a ‘Partnership’ with my wife. I would suggest that it would be far easier than employing her. With employment you would have to do PAYE and be paying tax and NI as you go. With a Partnership you don’t, in effect it operates just like two sole traders really, with an ‘on paper’ share out of the profits at the end of the tax year.
The share of profits does not need to be equal. So if your wife is working part time elsewhere, you could still keep here earnings under the £12.5k [or whatever the precise figure is for 2020/2021]. So if she is earning say £6k in her part time job then her share of the Partnership profits could be £6.5k, so that there would be no tax liability for her.
If she stopped the other work and only worked with you, then you would have a joint tax threshold of about £25k before you paid any tax. There is NI of course. It doesn’t matter if you are earning 90% of the income and your wife only 10%, you can still split the profits as you see fit in order to maximise both of your personal tax allowance thresholds.
With a Partnership there are three tax returns to fill in. One normal tax return each and one Partnership return. It’s very easy and straight forward. All the actual details of trading are only on the Partnership tax return.
Myself and my wife were a partnership, I was advised this was the the most tax efficient way of doing things and it worked fine.
We are the other option where we run as a limited firm and the wife is a shareholder, now this was done a while ago and the tax benefits are not as good, but to be honest a good accountant would be able to give you the right way for you.
not sure why you would charge out less?
Thanks for the replies, looks like a partnership might be the way to go. I'll look further into this option.
James
I was thinking you would charge her out at more to make a profit on your employee rather than being a charity.
If you’re both on the same job and traveling together it halves most of your overheads, so charging her out at the same rate as yourself should leave a bit more in the bank for yourself.
My wife says she hopes you have checked her references.
One of the best landscape teams I have ever seen in action were a husband and wife, I was doing some work at a house on a private retirement complex and stopped for lunch when they arrived to do the communal areas.
They arrived in a large panel van with a trailer, the husband edged the grass then trimmed bushes, blew the trimmings onto the gras and hoed the borders with the Stihl attachment loosing other trimmings, whilst his wife mowed the grass and helped him finish off.
When they finished several hours later everything had been trimmed, edged, hoed and cut to perfection, it’s not often I see work to that standard.
I was at some housing association flats on Thursday and the grounds looked abysmal, yes the hedges and grass had been cut, but that’s all you could say.
Please be careful. I employed my wife to sort out my accounts. Comments like 'Do you kno whow much you spend on dinner?' and 'Can you buy fuel without sweets' still fly at me regularly.
I get ' out for breakfast again last week and a bottle of cola and chocolate with the fuel.🤣
LOL. it is scary at the end of the year when she tells me how much I have spent on food.