Reply to: Taking a salary equal to lower earnings limit

[Pondlife]

The OPs wife is a Director (a point I missed in my original reply) and as such is entitled to a Stipend/Salary because a Director has legal responsibilities. For a private company there are no legal responsibilities the a Co Sec HAS to perform and there is no longer a legal requirement to have one AFAIK.

If your partner is a director, they can take a stipend/salary
If your partner is a Co Sec, they must demonstrate that they are performing duties in line with their level of remuneration as I understand it.

Any accountants want to clarify?

[SuperLooper]

Not if she doesn't lift a finger to fulfill those responsibilities surely.

It's like being on call. You get paid for it even if you end up not having to do anything. You get paid just for accepting the responsibility.

[WordIsBond]

You can appoint her as Company Secretary which has legal responsibilities which alone would account for such a salary.

Since he said in the OP that she's already a director, which has legal responsibilities, this would be pointless.

Not if she doesn't lift a finger to fulfill those responsibilities surely.

There is still the legal liabilities the position entails, whether she "does anything" or not. That merits compensation. And it's likely he discusses with her decisions about which contracts to take, what kind of rates he should pursue, etc. That's director-like responsibilities. And having a second director is a form of "insurance" -- if something happens to him, there is someone to oversee payment of any outstanding liabilities, disbursement of funds, winding up the company, etc. Even if she never has to do that stuff, it's worth paying her something to have her in the role to take on the responsibilities of it if needed.

All that stuff is valuable. And giving a spouse compensation for it is often challenged on CUK, but not challenged by HMRC.

And to the further comment, of course, you could appoint anyone as Co Sec. There's probably restrictions on appointing a minor, but anyone else, you could. As MH said, though, don't expect any of the money to come back to you in a kickback.

[Major Hassle]

Surely if that's the case you can appoint any family member or friends as Co sec..........

I guess so but there would have to be no reciprocal return of any monies paid.

[northernladuk]

The secretary is accountable that's what they are paid for who undertakes the actual work doesn't matter as I understand it.

Surely if that's the case you can appoint any family member or friends as Co sec..........

[Major Hassle]

Not if she doesn't lift a finger to fulfill those responsibilities surely.

The secretary is accountable that's what they are paid for who undertakes the actual work doesn't matter as I understand it.

[northernladuk]

You can appoint her as Company Secretary which has legal responsibilities which alone would account for such a salary.

Not if she doesn't lift a finger to fulfill those responsibilities surely.

[Major Hassle]

If you're going to pay your wife £8k or £11k, you are going to have to be able to demonstrate that she is doing that amount of work for the company.

You can't claim she does £8k's worth of work because she once handed you your mobile when an agent rang you.

You can appoint her as Company Secretary which has legal responsibilities which alone would account for such a salary.

[SeanT]

My wife works full time and is also paid some dividends from my company (as she is entitled to). I have a little spreadsheet that figures out how much her shareholding should be now

[WordIsBond]

It is easy to register for PAYE, and easy to use Basic PAYE Tools.

Pondlife's comment about your wife having to work for her salary is accurate but not if your wife is a director. Call it a director's stipend if HMRC ever comes asking. That's justification enough, for £8K, to convince them it isn't worth trying to cause trouble. I am unaware of HMRC challenging a spouse director's stipend since the Arctic case, which they lost.

When you pay a salary of £8K or even £11K, you not only get your wife a qualifying year for state pension eligibility, that amount is also an expense so you don't pay corporation tax on it. But is your wife getting a qualifying year via child benefit anyway? Does that render the state pension eligibility concern moot? I don't know how eligibility works for mothers receiving child benefit, but you might want to check this out before taking action strictly because of pension eligibility. If you are doing it to save corporation and dividend tax, of course, then it is worth it even if you don't need it for pension eligibility.

There's one thing that is screaming at me in your original post, though. You are not a full-time contractor, you are part time. I assume that means you have another job. That means the advice above to pay both you and your wife £11.5K is probably not sound. You might want to give more details here about your own specific situation, or talk to a good accountant. Whatever you do, don't follow the advice of a bunch of people on the Internet who don't have the full picture.

There are two great limiters to the advice you get here. The first is the fact that we don't have all the relevant data. The second is that not everyone here knows what they are talking about. But there is a great advantage, too. Even accountants get things wrong (easy for me to say since I'm not one), and if the advice that is given is flawed, someone is likely to point it out.

[Pondlife]

If you're going to pay your wife £8k or £11k, you are going to have to be able to demonstrate that she is doing that amount of work for the company.

You can't claim she does £8k's worth of work because she once handed you your mobile when an agent rang you.

[boby]

thanks everyone, seems it best to register for PAYE

[Michael at BI Accountancy]

So if I want the NI credits i need to register for PAYE. If I do not need the NI credits I can skip PAYE registration?

Should you not want to register for PAYE then if you still want to obtain NI credits you would need to look into voluntary contributions (class 3).

https://www.gov.uk/voluntary-nationa...-contributions

[Louisa@AardvarkAccounting]

There seems to be some conflicting advice about whether you still need to report this salary under the RTI requirements.

If you do register for PAYE, you can easily make RTI submissions for free through HMRC's Basic Tools.

You are right, HMRC's website does state you don't need to register for PAYE. However one way or another, HMRC or at least the DWP will need to know what she is earning so this is correctly shown.

So, if the employee earns £113 per week or less and this is not reported to HMRC through RTI, the individual will be expected to inform DWP of their earnings instead.

[boby]

The HMRC website states i do not need to register for paye as the if the salary is less then £113

https://www.gov.uk/paye-for-employers

You don’t need to register for PAYE if none of your employees are paid £113 or more a week, get expenses and benefits, have another job or get a pension. However, you must keep payroll records.

So if I want the NI credits i need to register for PAYE. If I do not need the NI credits I can skip PAYE registration?