Wife is company sec - should I pay her?

[MugsGame]

My wife is my company secretary and does various admin and accounts tasks that I'm too busy [lazy] to do.

It occurs to me that I should be paying her to do this (I suppose...) to make use of her tax allowance.

In the eyes of HMRC, what is a reasonable amount to pay her? Do I have to pay the minimum wage per hour (whatever that is this week)?

What is a tax-efficient amount to pay? She probably does 2-4 hours a week.

Many thanks in advance...

[QwertyBerty]

I've started paying the missus (company sec) £453 per month. This attracts no NIC or income tax and also gives her a qualifying pension year.

QB.

[Jammy Dodger]

I too am trying to work out if its worth putting the missus on the payroll.

My main issue is trying to work out if it helps against any investigations should that tw@t Gordon push through income shifting next year.

could being an employee mitigate circumstance if you are an employee receiving divvis as opposed to not being an employee ?

JD

[QwertyBerty]

Isn't the income shifting legislation more to do with dividends?

QB.

[Jammy Dodger]

yes. but what i'm not sure about is if hector would have less of a claim if the "income shiftee" was also on the payroll...as opposed to purely receiving divvis only.

hopefully it won't get that far, and people will stop voting f##king labour.

[malvolio]

FBT (not "Income shifting" please - it's a tax on family businesses ) is about dividends, but their idea is that if the payment is aligned to work done, it's not a problem. However, if CoSec does 10% of the work and gets 50% of the divves, you get taxed on the other 40% at full rate as though it was your income, not theirs.

So salaried or not, the only benefit to FBT is being able to demonstrate there is a real contribution: snag is, it probably won't be enough for most of us to offset the FBT charges...

However, there is a Plan B. Divorce the CoSec, marry someone else, keep CoSec1 as a mistress and give them some shares. FBT wouldn't apply at all. Daft, isn't it...

[Dow Jones]

75/25 salary/dividend split

I would have thought that if the wife/2nd director/Co Sec was also on the payroll, that meant that she was actually doing some work, as opposed to skimming off the profits.
I'd go along with what QB suggested, coupled with a 75/25 shareholding/dividend split. In other words, if the wife's salary is roughly £ 5k and the husband's £ 15k that's the same split reflected in both salaries and dividends. Not a iron-cast guaranteed solution, but one that any judge will find hard to resist.

[MugsGame]

However, there is a Plan B. Divorce the CoSec, marry someone else, keep CoSec1 as a mistress and give them some shares. FBT wouldn't apply at all. Daft, isn't it...

Interesting plan, I will run it past the wife.

I would have thought that if the wife/2nd director/Co Sec was also on the payroll, that meant that she was actually doing some work, as opposed to skimming off the profits.
I'd go along with what QB suggested, coupled with a 75/25 shareholding/dividend split. In other words, if the wife's salary is roughly £ 5k and the husband's £ 15k that's the same split reflected in both salaries and dividends. Not a iron-cast guaranteed solution, but one that any judge will find hard to resist.

Another good idea. I was wondering, if I basically pay her £4500 (or whatever it is to avoid paid NI/PAYE) then does it look like we're just trying to avoid paying tax? Or would HMRC allow this as 'making best use of tax allowance' (worth a try?)

Should I just pay her a reasonable hourly rate for the work done, as long as the annual total isn't going above £4.5k?

[chris79]

I'm in the same position and this is my take on it:-

My partner does my book keeping/business admin/etc as well as a very small amount of work for a separate contract we have (1 day a week). For this I pay her minimum wage of £88.32 a week, after all, she's working for the company and she should be paid right?

On the dividend side of things we hold a 50/50 holding, since there is nothing yet in law to say I cannot do this we both receive dividends from our company profits.

To think you should _NOT_ pay your wife for doing some work through fear of income shifting is mad. After all, she is doing legitimate work and should rightfully be paid?

It's a sad state of affairs this country is in when people are scared to pay people money through fear of this axe wielding tax man. How does this scare mongering start I wonder??

[malvolio]

But it's nothing to do with salary, it's to do with effort expended. Salary and employement status vis-a-vis YourCo is utterly irrelevant