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Remuneration of husband and wife employees

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I've been asked about a situation where a company employs both husband and wife in different roles. They have approached the MD asking if they can rearrange their remuneration so that husband (currently a basic rate taxpayer) gets more, and wife (currently higher rate taxpayer) gets less.

Seems slightly dodgy to me, however if some of the wife's responsibilities were to be transferred to the husband, I suppose that would justify the revised remuneration levels. 

Anybody got any views on this?

Replies (24)

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By David Ex
11th Jan 2022 11:56

Ben McLintock wrote:

Anybody got any views on this?

Why would any third party employer even have the discussion? Ludicrous.

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paddle steamer
By DJKL
11th Jan 2022 12:02

What happens if they need to terminate one in the future?

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By Wanderer
11th Jan 2022 12:13

Just say no.

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RLI
By lionofludesch
11th Jan 2022 13:19

[sigh]

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By I'msorryIhaven'taclue
11th Jan 2022 13:23

Careful you don't deprive the child benefit people of their clawback.

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By accountaholic
11th Jan 2022 13:33

If it's a small difference, then no, it's not worth it.
If it's a big difference, then no, because of the potential impact on earnings related payments such as redundancy or pension.
What happens in a future divorce, can you then reduce the new contractual salary.

Possible fraud or General Anti Avoidance trap - arranging affairs specifically to reduce tax payable.

Finally (and did I say no earlier), why give yourself (as MD) a problem you don't need just to solve someone else's problem.

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By Paul Crowley
11th Jan 2022 14:16

It is a definite no for all the reasons stated above.
Why would MD want to get involved in a tax avoidance scheme that only benefits the employees?

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Replying to Paul Crowley:
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By David Ex
11th Jan 2022 14:21

Paul Crowley wrote:

It is a definite no for all the reasons stated above.
Why would MD want to get involved in a tax avoidance scheme that only benefits the employees?

Should offer to reduce the wife's salary. That'll save the couple some tax.

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Replying to David Ex:
paddle steamer
By DJKL
11th Jan 2022 14:38

Reminds me of a response I gave to a travel agent client, he was moaning about their vat bill, I explained it arose from the transactions in the period, not a lot could be done, he carried on moaning about what he could do to reduce it and in the end I just snapped and told him to "sell fewer holidays"- this did not go down well.

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Replying to DJKL:
RLI
By lionofludesch
11th Jan 2022 14:44

DJKL wrote:

Reminds me of a response I gave to a travel agent client, he was moaning about their vat bill, I explained it arose from the transactions in the period, not a lot could be done, he carried on moaning about what he could do to reduce it and in the end I just snapped and told him to "sell fewer holidays"- this did not go down well.

People just don't appreciate good advice.

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Replying to lionofludesch:
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By I'msorryIhaven'taclue
11th Jan 2022 15:58

Bet he's not selling many holidays now!

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Replying to I'msorryIhaven'taclue:
paddle steamer
By DJKL
11th Jan 2022 16:27

He actually sold up years ago (as travel agency contracted with all the online offerings then avialable, circa 2000 onward) and is I believe now deceased, so correct, he is probably not selling much.

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Replying to David Ex:
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By Leywood
11th Jan 2022 14:46

Yes, pass the portion of the work on the hubby, he obviously has capacity. Pay him the same. Reduce wife's hours, she no longer needs to wrok full time, pay her less. Job done. Company saves some cash!

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Replying to David Ex:
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By Hugo Fair
11th Jan 2022 15:57

And then fire the husband ... that way everybody saves!

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By Ben McLintock
11th Jan 2022 15:06

Thanks for the replies folks - will go with my initial sense that it's a dodgy idea and stop the mental gymnastics of trying to come up with circumstances in which it may be okay.

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Replying to Ben McLintock:
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By I'msorryIhaven'taclue
11th Jan 2022 16:01

Sign of the times that the wife is the higher earner.

Anyone recall when salaries were advertised at two levels, one for men and a scaled down rate for women?

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Replying to I'msorryIhaven'taclue:
paddle steamer
By DJKL
11th Jan 2022 16:33

Not always, when we first got married my other half earned about 50% more than I did, she had a generous final salary pension, BUPA, subsidised/capped mortgage and a generous annual bonus- catch is 15 months later first child turned up, she moved to a three day week blighting her career (stockmarket quant analyst) and our lifestyle took a tumble that it took years to correct. (Pesky kids have a lot to answer for, she could have kept me in the style to which I had become accustomed )

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Replying to Ben McLintock:
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By Hugo Fair
11th Jan 2022 16:01

Not so much 'dodgy' as that rare hybrid - both ineffective and crazy (the examples mentioned so far only scratch the surface) at the same time!

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Replying to Hugo Fair:
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By Tax Dragon
11th Jan 2022 17:06

I don't want to pick a fray but surely crazy is always ineffective... or it wouldn't be crazy?

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Replying to Tax Dragon:
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By Hugo Fair
11th Jan 2022 17:23

Nary an affray in sight, but (at risk of sounding quasi-political):

Track & Trace = not crazy (conceptually) but absolutely ineffective (operationally) ... conversely ...
Opting-out of AE as an employee = crazy (by most people's reckoning) but not at all ineffective (if intention was to minimise deductions today).
Basically 'often' is often but not always equal to 'always', n'est-ce pas?

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Replying to Hugo Fair:
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By Tax Dragon
11th Jan 2022 17:33

Aha, you concede 'often'? So was my erroneous 'always' less erroneous than your erroneous 'rare hybrid'?

.oO Less erroneous… does that even mean anything?! Comedy of erroneousness developing here.

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Replying to Tax Dragon:
paddle steamer
By DJKL
11th Jan 2022 17:37

Think should be plural but am not going to attempt to write it correctly, is it an es on the end?

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Replying to DJKL:
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By Tax Dragon
11th Jan 2022 17:43

Let's try: erroneousnesses... yep, looks like a word to me.

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Replying to Tax Dragon:
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By Hugo Fair
11th Jan 2022 18:21

Mea culpa - 'rare' was both unnecessary and inaccurate as a description of the frequency with which the indicated hybrid might expect to be encountered.

But I'm not sure that your erroneous 'always' can be considered less erroneous than my erroneous 'rare hybrid' - for the entirely different reason that the comparative degree of erroneousness doesn't really make sense when measured against two different subjects.
A second incarnation of a particular document can be shown to be less erroneous than a subsequent version of it (by counting the reduction in errors - those that have been corrected).
Whereas my error-strewn opinion of a particular subject cannot be sensibly compared in terms of the degree of errors to be found within your opinion on an entirely different subject.

But all that ignores one of my (many) failings - enjoying playing with language as merely an art form rather than any linguistic objective, and so forgetting that the words also contain meaning (quite possibly incorrect meaning at that).
I rather enjoyed coming up with "'often' is often but not always equal to 'always'" - but smugness is not an attractive feature (especially when it masks errors)!

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