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The benefits of transferring income to your spouse.
At Small Business Accountancy Scotland we can advise businesses in the Falkirk area on the possible tax advantages of employing your spouse 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 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.
In order to justify a salary, the following points must be borne in mind:
As well as a salary, you may be able to pay premiums for a special pension arrangement for your spouse. These should not be taxable on your spouse 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 has no other employment, a 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 (£118 per week for 2019/20) 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, you should consider the following points:
Please give us a call if there are any points you would like to discuss.
If you are in the Falkirk area and are considering employing your spouse in your business, Small Business Accountancy Scotland can advise you of the tax advantages and other implications.