is there a tax advantage to paying my wife formally from my business if she does not work otherwise?

Answer 1

just be careful if you have a ltd company as there is currently a case where the revenue are trying to treat the wifes income as her husbands and therefore taxing the additional income on the husband at 40%. as long as the wife is working in the company or business, you can pay her. even if she isnt a director or secretay of a company, she will be treated like a director as husband and wife are seen as the same. best take some professional advice from an accountant to avoid any problems and get it setup correctly.

Answer 2

Oh definitely yes! If you have set yourself up as a limited company, your wife is probably already the Company Secretary and has shares. You can pay her whatever you like in the form of PAYE and Dividends, although the more you pay her the more the tax burden becomes.

There is a threshold up to which you can pay your wife and she will not incur a personal tax liability, these are:

Salary - £435 per month
Dividends - £2,595 per month

As long as your wife is either the company secretary, or a director or shareholder, you can pay her.

Remember though, you will still have to pay corporation tax on all money received into your company, at a rate of 19%.

Any reputable accountant will give you this advice.

All the best! :-)

Answer 3

Yes .. if your Buniness is profitable, then paying wages to your wife will reduce your profits and thus your Corporation Tax. If you employ her part time and pay her no more than her Personal Allowance, she does not have to pay Tax either.

Of course Inland Revenue is wise to this and you will need to show she actually does work for the business ... for example typing up orders, chasing invoices, managing the petty cash etc.

Answer 4

You can only pay her the going rate for the services she is providing, and you must be able to prove that she is working within your business. If the tax man believes that it is just you paying yourself a bit more, but making the most of your wife's lower tax bands, you will ultimately be taxed. (Trust me I'm an accountant!)

Answer 5

Yes you can pay her her personal tax free amount. This is seen as a business expence for you but she will pay no tax.

That said you will have to account for this by way of PAYE which can be a pain and she must be seen to work for you or the tax man will have your guts for garters.

Answer 6

All the other answers are giving sound advice but don't forget you will need to pay her over the minimum wage level.