Occasional working with another sole trader

SVGas

I’m at the final stage of qualifying as a domestic Gas engineer and plan to become a sole trader ( or a hybrid of contracting work + sole trader) - I have an old work colleague who is already qualified / working in domestic and commercial gas, has a lot of contacts and is also planning to go solo and is interested in us working together.
I’ve researched us going into partnership as sole traders ( don’t want to go the ltd. Co route as he is planning to retire in 3 years) but it seems likely we would go above the vat threshold quite easily - 4 boiler services a day x 4 days a week for 45 weeks a year would put me on £50k turnover which suits me fine and is nowhere near the vat limit, whereas we could each only earn £42500 before needing to register, we live in neighbouring counties so there is a wide area we can cover, seperately and jointly.
Ideally we want to join forces for boiler installations so could one of us pay the other as a self employed contractor once a month via invoice and just put it under expenses on self assessment?
we are probably only talking 1 or 2 per month and it would be a £700 labour rate spilt between the two of us. So 10 jobs a year would give us each £3500, 20 = £7000. Neither of us wants the added hassle of having the other as an employee for such a small amount, there must be an easier way?
We would essentially be giving up £10k each of turnover by being vat registered partners unless I’m mistaken, as the majority of work will be for domestic customers and neither of us want to put in silly hours so a joint turnover above £100-120k isn’t really a viable option.
So in a nutshell - is it possible for one of us to just pay a daily rate of £350 to the other for the once or twice a month we would work together?

TomFromCrunch

I’ve just had a word with one of our experts here at Crunch, they said yes, one can pay the other a daily rate. I appreciate you said you’d rather not go limited, but from a tax-efficiency perspective it’d also be worth considering.

Even if your colleague is looking to retire in 3 years, they could be 50/50 shareholder/director, or one of you can be the sole director/shareholder and the other be a freelance sole trader invoicing the limited company.

50/50 shareholders might foster better relations - it entirely depends on your relationship!

Hope this is helpful. Our Ask an Accountant service is available if you’d like to have a one-to-one chat with an expert.

SVGas

Thank you.
I have another query, I plan to employ my wife part time for admin, I would pay her £500 a month (to stay under all limits and also save myself a bit of tax ) and into her own bank account. As far as I know I wouldn’t have to register as an employer but then how would she then declare her income - self assessment ?

TomFromCrunch

Hello! Yes, that’s right, Self Assessment would be the right option for your wife in this instance. This jargon-free article and video might be helpful.

Of course, we can also help with the Self Assessment as well!

SVGas

Thanks, we are familiar with Self assessment, we had a small online retail business for 3 years, 10+ years ago.
She’s not employed anywhere else.
I hadn’t heard about this making tax digital malarkey until very recently though, not to mention Payment on account!
Mine will be interesting for 22/23, there’s a mixture of Job seekers allowance, Contract work and then, hopefully, self employment.
I’m surprised and annoyed that I can’t put the £5k cost of my Gas training course down as expenses but at least any further training will be allowable.

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