Is it possible for a director to pay his wife a small salary in order to get around the change to the employment allowance where a company cannot claim if the director is the only person on the payroll?
Replies (8)
Please login or register to join the discussion.
Assuming the payment is for genuine reasons of employment, then yes of course the employer can claim the Employment Allowance. But if it's not.....
If the wife is legitimately employed by the Company and the small salary is justified then I would read https://www.accountingweb.co.uk/tax/hmrc-policy/companies-tricked-out-of... If the Director is just paying his wife a small salary "in order to get around the change the employment allowance" then I would expect HMRC to frown very deeply and take action against him.
If the wife is legitimately employed by the Company and the small salary is justified then I would read https://www.accountingweb.co.uk/tax/hmrc-policy/companies-tricked-out-of-... If the Director is just paying his wife a small salary "in order to get around the change the employment allowance" then I would expect HMRC to frown very deeply and take action against him.
The tax benefit is so small to uplift a salary from £8,060 to £11,000 for a one man director so I do not see the point in employing a wife. However, employing her to use up her Personal Allowance now that is a saving to be had.
The wife's salary would need to be large enough for her to pay some Employer National Insurance.
The wife's salary would need to be large enough for her to pay some Employer National Insurance.
OFFS
The wife's salary would need to be large enough for her to pay some Employer National Insurance.
Them's fighting words.
The thing is, whilst I don't share the view that the legislation requires the second employee to pay some NI, if HMRC hold that view, somebody's going to need to take the case to Tribunal and the NI at stake unlikely to be worth the cost of doing it.
Standards of draftsmanship these days, tsk tsk .......