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Sam, Accountant
Category: Tax
Satisfied Customers: 14191
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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I am 80 in 3 weeks time and have started working for my stepson

Customer Question

I am 80 in 3 weeks time and have started working stepson at £l50 per week days. I have a state pension of £63 per week. No other pensions. Will I have to obtain a Tax Code and pay tax. I know I don't have to pay NI Thank
you help.
Submitted: 3 years ago.
Category: Tax
Expert:  Sam replied 3 years ago.

Thanks question - I am Sam and I am one of the UK tax experts here on Just Answer.

Your stepson will need to register as an employer (if he has not done so already) and complete a form P46 , which states that this is your only job, but that you do have a pension.

HMRC can then establish that of the £10660 you can earn each year, £3276 will be used up to take into account your state pension, leaving £7384 a year to earn free of tax. As this income from employment of £150 a week will earn you £7800 (on a full tax year) you will just tip over the tax free limit, and need to pay tax of £83.20 per year on the £416 in excess of this threshold. This amounts to £1.60 a week. You are correct there will be no National Insurance, as you are state pension age, but there is just that little bit of tax.

But the receipt of the form P46 will allow HMRC to issue the correct tax code to be used each week against your pay, thereby deducting the right tax.

I have added a link here stepson regarding registering as an employer, if he is not already.

But let me know if you need any more information regarding your position of that stepson

Thanks Sam

Customer: replied 3 years ago.

Thank you answer. However, as my stepson and his business partner are not employing anyone else yet- they have just started a small business making cardboard tubes and I will be packing these ,- I will not be working on a regular weekly basis- just when required. Would it be OK if I gave them a receipt each time I am paid which will be included in their expenses ?

Obviously if there is any change and more staff are employed a proper Pay Roll would be started.

Expert:  Sam replied 3 years ago.

Thanks response
I am afraid its not a matter of choice whether you are employed (paid and tax deducted through the payroll) or self employed, paid gross without any deduction of tax.
Employment status is a position taken very seriously by HMRC - and failure to treat workers right comes at a high cost in penalties and charged interest and late employer monthly report charges.
And whilst you advise that you may not work every week, you still fall into the category of being an employee on which PAYE must be operated on if you are paid more than £111 in any week (which you will be)
So your stepson has no choice but to operate PAYE and run a payroll.
I am sorry the news is not more favourable, if you were to be paid just under £111 a week, (making sure that this meets with the National Minimum wage, which states that you must be paid at least £6.50 a n hour) then there would be no need payroll to be run and you could just declare this directly to HMRC to adjust your tax code.