Reply to: Ltd Company - Paying pension conts for my employee/wife

[MarillionFan]

a wifes value added services, definitely premium markup expected

Could you imagine if Hector questioned this. 'Try her for yourself!'

[Wanderer]

If we get have cooked scenario with elements missing how can we give a qualified answer.

All we have to do is to presume in good faith that the OP's spouse was a bonafide business partner and it was completely co-incidental that she was paid right up to the lower earnings limit for PAYE, then try and give a useful answer the question.

[northernladuk]

The original question was about pensions, not "My wife doesn't do any real work for the company but I'm going to pay her a salary and dividends anyway, is this OK?".

My response serves to remind people that it's none of our business if a company director chooses to employ their spouse. Knowing nothing of this man's tax affairs, what makes people think they have the right to question if the OP he should be employing his wife or not?

But we do have the right by the fact he is asking us a question based on his personal circumstances. He is asking our advice and part of giving advice is understanding the situation to give the best answer possible. The OP has the right to answer or not of course. How can we answer questions accurately if we don't ask further questions. If we get have cooked scenario with elements missing how can we give a qualified answer. These discussions often bring out aspects the OP never considered i.e. he may now be relooking at how much he is paying her and thinking about whether he is abusing the system and may need to change his approach. Helping him avoid an expensive HMRC investigation by doing something wrong is priceless to him surely.

There is also the point of posting on open forums. We can ask what we want. The right is with the OP to answer or not.

[Weltchy]

Out of curiosity, why assume the wife is a part time employee who works only 10 hours a week? I know plenty of permie's who sign off each week saying they worked 40 hours when in fact it's more like 10. You walk past any seccie's desk during the day and I swear you'll see them surfing ebay or some other online shop.

[Wanderer]

In what way did your comment help the OP, did your comment add anything to the overall discussion?

The original question was about pensions, not "My wife doesn't do any real work for the company but I'm going to pay her a salary and dividends anyway, is this OK?".

My response serves to remind people that it's none of our business if a company director chooses to employ their spouse. Knowing nothing of this man's tax affairs, what makes people think they have the right to question if the OP he should be employing his wife or not?

[Robot]

That's none of your bloody business.

In what way did your comment help the OP, did your comment add anything to the overall discussion?

Chrisl has the answers provided you with 'some food for thought' and have you raised your query with your accountant?

[xchaotic]

Henry Ford himself and many other big entrpreneurs have said that if you're in the business just for making money then you're doing it wrong.
You set up a business to create workplaces for other that lack that entrepreneurial spirit.
And if that person happens to be your wife, why not give her all the social benefits that you can (legally) afford?

[IR35 Avoider]

The sum total of salary and pension contributions you pay your wife must be the same amount you would pay someone you are not related to to do the same work.

If it's more, HMRC can disallow the extra as an expense in calculating you corporation tax.

Obviously it's not clear-cut what you would pay a book-keeper you found in the yellow pages, or how many hours your wife actually works, so there is some wriggle-room. As with all expenses, what sounds vaguely plausible when you deduct it will probably be a lot harder to justify while looking into the eyes of a tax inspector sitting across the table from you. If accountants offered a service where they role-played the inspector in a mock interview I suspect 90% of the expenses contractors claim would not be claimed.

[Random]

is there any point in paying your wife more, why not just give her dividends?

[northernladuk]

That's none of your bloody business.

I would say it is. If the guys is asking for advice and is actually fudging the system without realising Robot could be point out that the OP is flying close to the wind trying to evade tax by over paying his wife for next to nothing and then trying to further add to his woes by paying her a pension and when HMRC comes a knocking she does nothing and the OP is in a whole host of problems. It would be highly tempting to do this but really is just falling foul of HMRC.

It is not an unreasonable question and to be honest the way I read it is isn't a question more than a statement of surprise

[northernladuk]

a wifes value added services, definitely premium markup expected

By who? The wife and HMRC?

[Random]

a wifes value added services, definitely premium markup expected

[Wanderer]

What does she do for the company that merits a £6k salary?

That's none of your bloody business.

[Robot]

I know myself as a director can pay company contributions into my pension, but if my employee who is my wife (paying her £6k per year) wants to make contributions as well to her pension, i assume i can as the employer top it up by agreeing to pay the same amount again and get myself tax relief on this against CT.

I know alot of big companies have pension schemes for their employees so i cant see why a one man limited can not do it also.

Is it really that simple or does anything special need to be done/applied for?

What does she do for the company that merits a £6k salary? Most contractors on here say they can do the bookkeeping etc a couple of hours a month, lets say it takes her 10 hours per month that is an hourly rate of £50 per hour, most bookkeepers earn £12 - £25 per hour.

And now you want to justify a pension payment

[lje]

I know myself as a director can pay company contributions into my pension, but if my employee who is my wife (paying her £6k per year) wants to make contributions as well to her pension, i assume i can as the employer top it up by agreeing to pay the same amount again and get myself tax relief on this against CT.

I know alot of big companies have pension schemes for their employees so i cant see why a one man limited can not do it also.

Is it really that simple or does anything special need to be done/applied for?

You can pay in to your employee's pension. I don't believe that she has to make any personal contributions.