We run a business and need to employ additional staff over the summer holidays. These typically will be students or children. Can we just pay cash and not put them on the payroll?
Any wage payments made to employees should be disclosed to HM Revenue & Customs, whether or not you pay them in cash. If you are looking to employ students during the summer holidays (or other holiday periods) then they need to fill in a form P38(S) and send it off to HM Revenue & Customs. As long as the student does not earn more than £8,105 in your employment then this form means you can pay them without deducting income tax (PAYE). However, National Insurance is still payable if they earn over £144/week. From the 6th April 2013 this procedure is changing and you will need to treat the students as you would normal employees.
There has been a lot in the press recently on tax avoidance schemes, especially involving the Comedian Jimmy Carr. Are there genuine schemes out there that can reduce my tax liability legitimately?
There is a big difference between tax avoidance and tax evasion. Tax evasion is illegal, whilst tax avoidance is not. Tax avoidance can include many schemes actually backed by the government i.e. ISA’s, EIS’S, VCT’S, pension contributions and many more. The other types of schemes that have been in the press are legal and as long as they are commercially based, should not fall foul of HMRC rules. In fact many of the schemes have to be registered with HMRC in the first place. If you would like to have further information about reducing your tax liability, please do not hesitate to contact our office.
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