Tax Tip Week 30 - Spouse's Salary
For Professional Contractors and Freelancers who provide their services through their own limited company, every allowable expense counts in reducing profits and therefore corporation tax payable.
For those that have a spouse, it may be beneficial to pay that spouse a salary through the limited company.
To pay a salary, the spouse has to do some work for the company. They have to be paid at a reasonable rate; and for peace of mind it is advisable to keep a diary of all hours worked.
There are certain factors however, that need taking into consideration:
- Other salary or income in the same tax year
- Working Tax Credits
- Job Seekers Allowance
- Any other state benefits
- Personal Tax Allowance
- National Minimum Wage
- Market Rate Salary
- State Pension requirements
- SSP, SMP,SPP,SAP
Please see our guide Spouse's Salary in our Knowledgebase.