Wages for spouses

Many small businesses seek to reduce their tax bill by paying a small salary to their spouse. We have no problem with this but we would point out a couple of issues that the Taxman will look into during an investigation:

- make sure you actually pay the wages into your spouse’s bank account - a mere paper transaction will not really suffice.
- make sure the wages paid are commensurate with the duties performed and that these duties are documented as a job role, e.g. a £60k salary for ‘doing a bit of filing’ isn’t going to wash with the Taxman.

Of course, if your spouse also happens to be a director of your company it is also justifiable to pay some money to recognise the responsibilties that being a director involves.