Reply to: Typical hourly rates for spouse as limited company admin

[TheCyclingProgrammer]

I welcome your views. I think of it as a business rather than a career, and it depends on the nature of the business (some of us are doing more than just contracting), as to what can be justified.

Look, people on here can only give their opinions based on the facts presented.

Don't overthink the "commercial rate" thing. Like I said, take some similar rates and take an average and keep this as evidence so if in the unlikely event that your CT return is queried you can show how you decided on that rate. And consider a fixed monthly wage over hourly to make life easier. The likelihood is that nobody will ever question it, not at the levels of remuneration we're talking about here. But if they do, you're prepared to make your case.

On the subject of whether remuneration is justifiable at all only you can really make that decision. Definitely consult your accountant for their professional opinion - its what you are paying them for. But ultimately, you're the company director and its your decision. If you think its commercially justifiable, then go for it.

[ruasonid]

I'm all for remuneration if she is doing work in some form but my only thought on this is 6 hours a week? Maintaining profile on jobs boards? Research? Really??? LOL...

I am know there are many contractors, if not most on here that have a very successful career and can manage it with very little extra effort and certainly don't need their partners to do it for them. I am sure in some cases this might be true but my guy feel is just not to believe it. Bit like the one where every iPad bought through the LTD is used for business with minimal private use. Pull the other one.

IMO for the amount of money saved it's a no goer for me. Fudge your car mileage by using which ever sat nav gives you the longest journey and make the same amount that way.

I welcome your views. I think of it as a business rather than a career, and it depends on the nature of the business (some of us are doing more than just contracting), as to what can be justified.

[northernladuk]

I take your point but not sure I agree admin work is minimal. Its not my forte but quite often takes me most of Saturday mornings. Its about getting the work done, keeping the house (business) in order, and freeing my time for billable work, keeping my knowledge current, etc. I'm not going to gift my spouse anything for free!

I'm all for remuneration if she is doing work in some form but my only thought on this is 6 hours a week? Maintaining profile on jobs boards? Research? Really??? LOL...

I am know there are many contractors, if not most on here that have a very successful career and can manage it with very little extra effort and certainly don't need their partners to do it for them. I am sure in some cases this might be true but my guy feel is just not to believe it. Bit like the one where every iPad bought through the LTD is used for business with minimal private use. Pull the other one.

IMO for the amount of money saved it's a no goer for me. Fudge your car mileage by using which ever sat nav gives you the longest journey and make the same amount that way.

[ruasonid]

When we are asked about employing a family member, we always advise to steer clear of it.

For a one-man consultancy company the admin work required is minimal and the market rate that you would pay to a third party for work of this nature would realistically be the minimum wage - for what you get out of it I would suggest that it's hardly worth it.

If you are married and want her to get an income from the company, gift some shares to her - this has already been through the courts and so is a safer way to go about it.

I take your point but not sure I agree admin work is minimal. Its not my forte but quite often takes me most of Saturday mornings. Its about getting the work done, keeping the house (business) in order, and freeing my time for billable work, keeping my knowledge current, etc. I'm not going to gift my spouse anything for free!

[TheCyclingProgrammer]

For a one-man consultancy company the admin work required is minimal and the market rate that you would pay to a third party for work of this nature would realistically be the minimum wage - for what you get out of it I would suggest that it's hardly worth it.

OTOH, if OPs spouse is doing significant work for the company and OP can justify a small salary, I wouldn't overthink this too much. It sounds like OPs spouse is doing more than basic admin work so a salary may be perfectly justifiable.

I think OP is overthinking this. The test for the salary is the same as any other business expense. Is it wholly and exclusively for business purposes? If so, then its an allowable deduction for corporation tax purposes. If it isn't, then its not (although there's nothing that prevents the company from paying a salary out of its post-tax profit it wouldn't be very tax efficient).

The main risk is that any salary is considered excessive or not commercial which may be a pointer to it not being "wholly and exclusively" for business purposes.

Its not hard to collect evidence that any salary you are paying is reasonable and commercial.

OP: HMRC guidance that covers this is here:
http://www.hmrc.gov.uk/manuals/bimmanual/BIM37735.htm

And on the subject of excessive remuneration:
http://www.hmrc.gov.uk/manuals/bimmanual/BIM37707.htm

I think there's a tendency to overestimate the risk in paying a salary to a family member - so long as its reasonable and the same as any salary you'd pay at "arms length" then you don't really have anything to worry about.

Craig is right that making your spouse a shareholder might be the way to go instead of (or as well as) but this is something you need to discuss with your accountant to make sure you're aware of all the facts about this.

Ultimately the only person who can give you the best guidance is your own accountant as they will be best place to know what works best for you and your company.

[Craig at Nixon Williams]

When we are asked about employing a family member, we always advise to steer clear of it.

For a one-man consultancy company the admin work required is minimal and the market rate that you would pay to a third party for work of this nature would realistically be the minimum wage - for what you get out of it I would suggest that it's hardly worth it.

If you are married and want her to get an income from the company, gift some shares to her - this has already been through the courts and so is a safer way to go about it.

[ruasonid]

What does your accountant say?

He's on holiday! Thought I'd sound out replies here until he gets back to me.

I think it comes down to what can be justified for the work done, and some evidence of the work is necessary for that purpose. Research is tricky, because a lot is done online and there's often little to show for it.

[northernladuk]

What does your accountant say?

[ruasonid]

Would you expect time sheets if you were employing somebody else and paying them an hourly rate? How else would you keep track of what you need to pay them?

I'd still establish a reasonable annual salary based on an average market rate and average hours and pay a fixed monthly wage rather than faffing around with paying by the hour.

I'm sure you know this, but remember you'll need to operate payroll whichever way you do it.

I'll do it that way, just need to establish the rate and calculate the annual/monthly.

[ruasonid]

What would you pay to a third party who was totally unrelated to you to complete work of this nature? That's the market rate..

Craig

For someone with the required mix of skills I'd say £12-£15 per hour. A Company Secretary proper, i.e. a person employed specifically and exclusively for that role appears to cost £19.62 per hour on average. This rate is trickier to determine as it relies on a mix of skills, not to mention trust. On that latter point, I feel more comfortable with my spouse (who was a company secretary previously, and has bi-lingual skills which I'll be making limited use of). Where this is going is I will probably appoint my spouse as company secretary in future, and, as with most small limited co's, would not employ a third-party in that role.

[TheCyclingProgrammer]

Would timesheets be necessary?

Would you expect time sheets if you were employing somebody else and paying them an hourly rate? How else would you keep track of what you need to pay them?

I'd still establish a reasonable annual salary based on an average market rate and average hours and pay a fixed monthly wage rather than faffing around with paying by the hour.

I'm sure you know this, but remember you'll need to operate payroll whichever way you do it.

[Craig at Nixon Williams]

Spouse is doing 6 hours/week admin work, including accounts, maintaining my profile on job boards, etc. and also research. Spouse is not a company secretary or director so I want to pay an hourly rate. Can't find any guidance on this but I'm guessing its worth more than NMW. Are there any pointers to a fair market rate?

What would you pay to a third party who was totally unrelated to you to complete work of this nature? That's the market rate..

Craig

[ruasonid]

Spouse has full allowance. I was thinking of something around £12/hr which would equate to £3500/pa and pay it monthly. Practically, some weeks would be more hours, some less, but on average 6 hours a week. I don't see it falling below that. Would timesheets be necessary?

[TheCyclingProgrammer]

I pay my wife an annual salary of £2400 although that also covers her responsibilities as company secretary. There are some on here that believe you should charge right up to the personal allowance if your spouse is company secretary/director but personally I believe that's pushing your luck.

Is there a reason why you want to pay her an hourly rate rather than a reasonable basic salary? I'd be very surprised I HMRC were to challenge a relatively low figure and it seems easier to manage (no time tracking necessary).

If you want to pay a reasonable market rate and nothing more, then can't you just go on some job websites and look up some similar jobs in your area? Find three, take an average and use that. As I said, the chances of HMRC querying it are slim but you'll have some evidence to back up your rates, if that's what you're worried about.

I'm assuming your spouse has some personal allowance left to use?

[d000hg]

£10-15?