December 10th, 2019

The Jonathan Ford & Co Advent Calendar – Day 10

 

Over the course of the festive season we’ll be bringing you an advent calendar’s worth of tax and financial tips.  Some of them might even be a little Christmassy!  Family members knocking around the house with nothing to do?  On the 10th day of advent, think about getting them involved in your business…

Employing non-working or low income family members

Consider employing non-working family members in your business so that their tax free personal allowances don’t go to waste.  If you pay them a reasonable wage for what they do for you then your business will get tax relief on the wage you pay them.  It’s likely they won’t pay tax either so it’s win-win.

This strategy can be used by both companies and sole traders although each has their own considerations.  Making a family member, for example a spouse, a director of the company can mean you can pay them more than if they were not a director.  This is because directors have specific responsibilities, as set out in the Companies Act.

Sole traders should take particular care, especially as paying family members can often be quite informal and in cash.  If you want the tax relief, however, then the arrangements need to be more formal.  The easiest way of doing this is to operate a payroll but if a log of hours is maintained and a bank transfer of the wages is made then a payroll may not be required.

Beware: sole traders may need to operate a payroll in any case if the family member has other income.

Share this post

Filed under

Limited Companies Payroll Tax Advice Uncategorised

by
Director

John manages a wide portfolio of owner managed businesses and oversees the smooth operation of the firm’s payroll department.

After obtaining his degree in mathematics from the University of Liverpool, John joined Jonathan Ford & Co in 2004 and qualified as a chartered accountant four years later. John likes to keep abreast of developments in tax and accounting and is responsible for the mentoring of junior staff.

Outside of work, John enjoys keeping fit and is a Liverpool FC season ticket holder.

Give a Goat

Give us a referral and we will donate a goat to a family in Africa

Find out more

Our Newsletter

Enter your email address to subscribe to our mailing list.
  • This field is for validation purposes and should be left unchanged.