Running a business:
Employing your spouse or partner
Many spouses assist in some way in a family business. Have you considered paying your spouse a salary for this work? Your spouse may well have unused personal allowances or pay tax at a lower rate than you do, and so paying a salary may result in an overall tax saving.
Depending on the level of the salary, your spouse could become entitled to the State Second Pension, a potentially valuable benefit. You could also consider contributing directly to pension arrangement for your spouse. These contributions should not be taxable on your spouse and should save you tax as a business expense.
It may also be possible to provide your spouse with a ‘company car’, which should not give rise to any tax charge if the combined annual salary and notional benefit-in-kind is below £8,500.
All the above considerations apply equally to an unmarried partner or indeed to any other individual.
In order to justify a salary or benefits, the level of salary must be commercially justifiable and the salary must actually be paid to your spouse. Please contact us for advice as to the best level of salary to pay your spouse in your particular circumstances.
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Where next?
Within Remuneration ...
- Salary or dividend?
- Employing your children
- Remunerating your employees
- Enabling employees to participate in profits
- Pension schemes
Within Running a business ...
- Accounting systems
- Financial information
- Your business premises
- Remuneration
- Business risks
- PAYE
- VAT
- Business taxes
General ...
