Reply to: Wife is company sec - should I pay her?

[dmini]

My accountant advised £200/month was a good salary for my other half to do paperwork. That was based on some kind of HMRC advice - as far as I can remember

[QwertyBerty]

Your secretary does how much work a month? 4hrs maybe? So u pay her over £110 an hour?? Amazing....Now if that doesn't attract attention, I don't know what does.

LOL, not quite. Still some weeks are busier than others. Just like any other job eh?

[AZZIK]

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.

Your secretary does how much work a month? 4hrs maybe? So u pay her over £110 an hour?? Amazing....Now if that doesn't attract attention, I don't know what does.

[FunctionCall]

Can you imagine the news headlines "HMRC say millions of housewives don't deserve paying"

I would love to see them marching in the streets

The fact is though without such support would many of us be able to do what we do (and earn what we earn)?

I doubt they'd argue that wives didn't deserve paying, just that they shouldn't be paid by the company.

If you want to pay her out of your income, I'm sure they wouldn't have a problem...

[agam]

By work I mean shopping, cooking, house work, taking kids to school etc.
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Unfortunately this is not classed as 'paid work',

Can you imagine the news headlines "HMRC say millions of housewives don't deserve paying"

I would love to see them marching in the streets

The fact is though without such support would many of us be able to do what we do (and earn what we earn)?

[lambrini_socialist]

By work I mean shopping, cooking, house work, taking kids to school etc.
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Unfortunately this is not classed as 'paid work'

yet god only knows the value to the economy of all this unpaid childcare. it's so wrong that engaging in "marketing activities" is deemed more valuable to society than raising well-balanced and healthy children.

[Dow Jones]

Nope

By work I mean shopping, cooking, house work, taking kids to school etc.
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Unfortunately this is not classed as 'paid work', anything like client-marketing, book-keeping, contract-checking is and needs to be accounted for. On average this shouldn't take more than 10 h/w hence maybe £ 100 p/w = 450 p/m which is the figure mentioned above. Also, strictly speaking, dividends should be split on that basis. A bit more to pay, but you buy peace of mind.
I agree sentimentally/morally is wrong, especially as in a divorce case your wife will be entitled half of your income, so you might as well split your earnings, but unfortunately they are treated differently in each case.

[agam]

I think for some of us however if our sives did not do the work they did we would not be able to do ours. By work I mean shopping, cooking, house work, taking kids to school etc. If I had to spend more of my time doing this I would make less money. Therefore in my opinion we are both putting in the same amount of effort for equal return.

I put this to my accountant and solicitor when the income shifting legislation was about to come into effect before being dropped in the last minute. I was looking at classing my wife as a PA rather than admin staff. To note she also does admin / book keeping work for me.

My thought on it then was I would love to see the tax man in the dock trying to convince a judge that my wife didn't deserve to be paid for what she was doing - god help him if she was present

[THEPUMA]

The other thing to consider is whether you need to pay your wife if she is a shareholder in order for her to be eligible for entrepreneurs' relief. From my reading of the guidance so far, being an office holder (ie co sec) is sufficient but it's possible that the Finance Act, once passed, will require more than that.

For the laymen amongst you, entrepreneurs' relief is the mechanism that will bring the effective rate of CGT down to 10% when you eventually close down your company.

[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

[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??

[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?

[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.

[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...

[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.