Tax Implications of Employing Family Members – Tax Insider, Keeping It In The Family – Employing Relatives, Keeping It In The Family – Employing Relatives, Tax rules when employing family members | Money Donut, SS (Categorisation of Earners) Regulations 1978 (SI 1978 No.1689) paragraph 8 in Part III of Schedule 1 A man who employs his wife, or a woman who employs her husband, in his or her employment is…
Regardless of your business structure (sole trader or limited company) you can employ your partner or spouse in your business. The general rule is that your partner or spouse should be paid for the effort and hours worked in your business.
Employing family members means that it should be possible to take advantage of lower tax rates and personal allowances that may be available to spouses, civil partners, and/or children. In turn, this arrangement can help reduce the household’s overall tax bill. A few rules, however, do need to be kept in mind when taking on family members:, Employing your spouse When considering the overall tax position of your family, it is worth considering if you can justify employ ing your spouse in your business. This is a means of transferring income from you to your spouse. It is likely to show a tax saving if your spouse has unused personal allowances or pays tax at a lower rate than you do.
Benefits of employing a spouse. Employing a spouse or a family member to ensure the admin or core business services are taken care of frees you up to maximise the company income. Paying them a salary can maximise household tax efficiencies by utilising their income thresholds for tax liabilities. Things to consider What salary will you pay?
