Thanks for the reply Joy.
I don't quite understand the bit about drawings. When I try to work it out it seems like a partnership is slightly more (about £130/year) better off but with the advantage that my wife is paying NIC so she gets a pension etc. I'm probably doing something wrong. Here's how I work it out (figures are just approx)
Say my profit is 20k/year (which is pretty optimistic...)
Sole trader with wife as employee leaves me with 15k after the expense of her salary.
0-5000 - my personal allowance
5000-7000 - 10% tax rate - £200
7000-15000 - 22% rate - £1760
Class 2 Nic - £109/year
Class 4 NIC - 5000-15000 @ 8% = 800
No tax or NIC for wife
TOTAL = £2869
Partnership - we take equal share of 20k profit so 10k each. (that is how it works isn't it?
0-5000 - personal allowance
5000-7000 - 10% - £200
7000 - 10000 - 22% - £660
Class 2 NIC - £109/year
Class 4 NIC - 5000-10000 @8 % = 400
TOTAL EACH = £1369
which is £2738 combined
Sorry to sound stupid, and I expect my calculations have huge holes in them, but why is employment of my wife an advantage over partnership?
Is a partnership a lot more hassle than dealing with PAYE. In fact do I even have to submit anything if she is earning <£96/week?
Thanks again for your help, it reduces the stress when there's a place with people who can point me in the right direction.