Spouses On The Payroll

[SimonMac]

Got married recently so looking to see if circumstances changing means I an be more tax efficient, I don't use an accountant so can't ask them, but want to bounce my thinking off the learned populous!

Marriage Allowance allows me to transfer 10% of MrsMac tax allowance to myself, but I guess this is offset by the extra NI i would pay (10% and 13.8%), so 99 times out of 100 it would not be worth while, however if I was to bring MrsMac on to the books as a PA, and pay her an appropriate salary (£10 a hour, 1 day a week, so say £4500 a year) this would allow me to claim the Employment Allowance on Class 1 NI, but is this on both Employers and Employees NI or just the companies contributions?

I know technically I could give her a salary of £11k a year like myself, but feel uneasy as it would be almost impossible to justify her salary, and I want to stay within the spirit of the law as well as the letter.

I guess its a no brainer to make her a shareholder of the company, as it will be easier to keep below the higher tax bracket, especially as I have additional income from my BTL.

[mudskipper]

AIUI the allowance transfer is only allowed if you are a basic rate tax payer - I'm guessing as the only earner this might not apply to you?

The employment allowance rules are not finalised yet. It seems quite probable that in the final rules the allowance will not be allowed in this situation. Don't plan round it until you know what it looks like.

[SimonMac]

AIUI the allowance transfer is only allowed if you are a basic rate tax payer - I'm guessing as the only earner this might not apply to you?

The employment allowance rules are not finalised yet. It seems quite probable that in the final rules the allowance will not be allowed in this situation. Don't plan round it until you know what it looks like.

What is defined as a basic tax rate payer? If you keep your dividends below the higher bracket surely that makes you a basic rate tax payer?

I know the EA rules are in consultation, just thinking ahead

[BrilloPad]

I want to stay within the spirit of the law as well as the letter.

Then put yourself within IR35.

Just pay her £11k a year. It is the letter of the law that counts.

[Eirikur]

I pay my spouse 11k per year. Accountant never ever objected to it. I know many here pay only £8k or so, but she wouldn't build up any state pension with that amount.

[mudskipper]

What is defined as a basic tax rate payer? If you keep your dividends below the higher bracket surely that makes you a basic rate tax payer?

I know the EA rules are in consultation, just thinking ahead

Yes. (And BTL income) I had assumed with a family to support and MrsMac below the personal allowance, you were going over that. (Forgot you were from Yorkshire ) As soon as she becomes a tax payer, you can no longer transfer the allowance.

[northernladuk]

I pay my spouse 11k per year. Accountant never ever objected to it. I know many here pay only £8k or so, but she wouldn't build up any state pension with that amount.

What does she do to earn that 11k?

[BrilloPad]

I pay my spouse 11k per year. Accountant never ever objected to it. I know many here pay only £8k or so, but she wouldn't build up any state pension with that amount.

Every few years I write off to DWP for pension statement for my wife and I. Then top up as necessary.

I have been paying since the age of 13 so nearly 40 years worth now!

[Eirikur]

What does she do to earn that 11k?

She is the company's canteen lady, cooks me dinners and nannie brings the kids to school and picks them up.
She also manages the director's carpark and keeps it free from intruders.

[SimonMac]

As soon as she becomes a tax payer, you can no longer transfer the allowance.

Ah I guess that puts the kibosh on the transfer, it only makes sense if I am above the £8060, but I only makes sense to be above the £8060 with more than one person on the payroll