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directors fees or wifes wages

directors fees or wifes wages

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I have always considered that any wages paid to the spouse in a limited company should be earned, so if the spouse does the books then he or she should be paid at a commercial(ish) rate and not merely to benefit from the LEL limits (£641 this year)

For example Mrs Dong does get paid from my company but only a few hundred pounds a year in return for trips to the post office etc and these are actually recorded.

However, on a recent course the lecturer stated that he pays his wife Directors Fees at the full £7.5k even though she does no work in the business.

My question therefore is "Can Directors fees be set at a higher "un-commercial" level of say £7.5K or will HMRC challenge (successfully?)

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By zarathustra
30th Apr 2013 16:42

Yes

Its difficult for HMRC to challenge the quantum of salary paid to a director as the office of director carries with it certain onerous responsibilities.

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By Roland195
30th Apr 2013 16:54

Made this point before

A client suggests that to lower the tax bill a bit he inflates his business mileage. After a quick swig of restorative brandy for the shock of such dastardly behavior being suggested, we lecture the client on why we can't do that and get out the SAR forms just in case.

Same client suggests that he put through a salary for his wife who in all probability does very little for the business. Would we even bat an eye at this?

So what is the difference? Why do we feel so strongly against one but are relatively indifferent to the other?

 

 

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By andy.partridge
30th Apr 2013 17:34

Apples and pears

Ding, is the wife a director? I believe this is a critical issue. If she is, her fees for undertaking that onerous responsibility are pretty much negotiable. If not, she should be paid a fair wage for the actual work she does. 

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