Can my mum cover my business while I am on maternity leave?

I run my own small business as a sole trader, but I am about to have a baby. I have claimed Maternity Allowance. I know I will lose MA if I work. Will I have to keep going and have no leave or can I get my mum to cover for me while I am taking some time off just to keep the business ticking over?

Pregnancy

 

There is absolutely no problems with a sole trader employing a member of the family. Provided the rules of PAYE & NI are observed (If that person has no other job you can pay up to £149 per week without any Tax or NI implications).

Payment is recorded in the books as a labour or admin expense. The rate paid must be commensurate with the job specified [and must be at least minimum wage] and the payment must be handed over (i.e. it cannot just be a tax-saving device).  Not enough sole traders use this!

 




Comments [1]

  • Anonymous says:

    Does the same apply to Limited Companies or do we have to pay staff (even if earning below £149) through a payroll? Thanks

    Editor: The same does apply, but Directors of Limited Companies are considered employees so a payroll should be in place. If the earnings are above the National Insurance Lower Earnings Limit (LEL) – £109 per week-  then that person should be processed as an employee to protect their State Pension entitlement.


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