Do you, or could you, employ your wife in your business?

It could be that if you are not, you are missing out on a valuable opportunity to save tax!

If you are, well done, you are already making use of this opportunity to save tax. But are you making the most of this opportunity?!

Spouses wages are a common, yet usually insignificant, expense in business accounts. For this cost to be tax deductible the wages must be commensurate with the work done and must be paid to the spouse.

For instance, if a spouse was paid £10,000 p.a. to take telephone messages on just one day a week, then the Inland Revenue would not allow that expense, although £2,000 might be allowable. You should also bear in mind that a spouses minimum wage must be paid at a rate which at least complies with the minimum wages legislation. Presently the minimum hourly rate which may be paid to an adult worker is £3.60 per hour. There is an exception from this regulation for employees of unincorporated family businesses though the potential tax savings from paying at least the minimum wage may we quite valuable.

If you could provide your spouse with real work then you could pay them a suitable wage or salary and save significant amounts of tax and national insurance. The savings are produced by moving income from a more highly taxed to a less highly taxed person. As the person is within the family, it is the family which benefits overall.

Another simple, yet possibly valuable benefit is the availability of enhanced pension benefits. How's about a full state pension for only 1p a week!

Interested? Try out our Spouse's Wage Calculator below and see what you have been missing!

SPOUSE'S WAGE CALCULATOR

Alternatively pick up the phone or E-mail David or Roger to discuss these and other savings.