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At Finnies we can advise on the possible tax advantages of employing your spouse or civil partner in the firm. Here is an overview of the issues.
When considering the overall tax position of your family, it is worth considering employing your spouse or civil partner in your business.
It is likely to show a tax saving if your spouse or civil partner has unused personal allowances or pays tax at a lower rate than you do.
The following points must be borne in mind:
As well as a salary, you may be able to pay contributions to a pension arrangement for your spouse or civil partner. These should not be taxable on your spouse or civil partner and should save you tax as a business expense.
All the above considerations apply equally to an unmarried partner or indeed to any other individual.
If your spouse or civil partner has no other employment, a Starter Checklist (available from https://www.gov.uk/government/publications/paye-starter-checklist) ) should be prepared with the Statement A (“This is my first job since last 6 April …”) ticked. You may then pay up to the Lower Earnings Limit for employees' national insurance (£123 per week for 2022/23) without any further formality.
If you already have a PAYE scheme for other employees, or don’t mind setting up a scheme for your spouse or civil partner, you should consider the following points:
Please give us a call if there are any points you would like to discuss.
If you are considering employing your spouse or civil partner in your business, Finnies can advise you of the tax advantages and other implications.
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