Single director employment allowance

Single director employment allowance

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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?

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By Tim Vane
06th May 2016 14:55

Yes, I can see why you might want to post that question anonymously.

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By Kevin Kavanagh
06th May 2016 14:57

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.....

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By legerman
06th May 2016 14:57

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.

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Replying to legerman:
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By Cleggy1
06th May 2016 15:35

Quote:

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.
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By Roland D
06th May 2016 16:02

The wife's salary would need to be large enough for her to pay some Employer National Insurance.

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Replying to Roland D:
By Tim Vane
06th May 2016 16:04

Quote:

The wife's salary would need to be large enough for her to pay some Employer National Insurance.

OFFS

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Replying to Roland D:
By Duggimon
06th May 2016 16:53

Quote:

The wife's salary would need to be large enough for her to pay some Employer National Insurance.

Them's fighting words.

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RLI
By lionofludesch
07th May 2016 10:22

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 .......

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