Company Secretary and tax question

sillysausage237

My husband has his own small company of which he is the sole employee and Director. He works as a contractor. We recently appointed an accountant who said that if I become the 'Company Secretary' and did the invoices and payed the various payments for the company, then I can be paid my tax free allowance (I think this is £6,035 for 08/09) as a wage which will not be subject to tax. Obviously my husband would pay this in the same way that he pays himself as an employee. Is this correct and if so, does he pay my tax and NI and then claim in back at the end of the year or can he just provide me with payslips that are tax/NI figure at zero?

I have already sent off the form to companies house to become the Company Secretary as I will do the official paying of VAT/corporation tax/all other fees due anyway as my husband doesn't have the time to do them as he works full time whereas I am 'just' a stay at home mum.

Thanks for any replies in advance.

Robertpestonrules

If the Company just pays you £6035 then not tax or NI is due - he just adds you to the payroll and pays you as he pays himself.

BoGoF

As long as you carry out some duties then yes your husband can pay you and claim a deduction as wages. However HMRC would expect the payment to be in line with the 'going rate' for the work done. For example if you only did 10 hours a week and were getting £6000 a year you are asking for trouble should any enquiries be made. I assume you have no other income ?

sillysausage237

BoGoF wrote: »

As long as you carry out some duties then yes your husband can pay you and claim a deduction as wages. However HMRC would expect the payment to be in line with the 'going rate' for the work done. For example if you only did 10 hours a week and were getting £6000 a year you are asking for trouble should any enquiries be made. I assume you have no other income ?

No, I have no other income. I don't know how many hours it would take me but I will be doing all the invoices, plus paying out all the various taxes and payments. I will also be doing all the paperwork.

Why would it be so strange to be doing 10 hours per week and earning £6,000 per year? That is only about £10 per hour and the normal sort of pay for secretarial work which is exactly what I will be doing.

BoGoF

The question to ask is whether you way pay someone to come in and do the work you are doing for 10 hours a week and pay them £6000 for it, if so fine.

Robertpestonrules

How is the "going rate" worked out?

In view of your husband being a contractor working through his own company, has he been warned about IR35 by the accountant?

Robertpestonrules

BoGoF wrote: »

The question to ask is whether you way pay someone to come in and do the work you are doing for 10 hours a week and pay them £6000 for it, if so fine.

I do this for my husband, plus the accounts and field phone calls, answer email queries from clients, etc, do all his travel arrangements and act as taxi (20 hours ish a week) , and as a 35% shareholder take substantially more than £6K in divis. I work odd hours, am at my husbands beck and call to a certain extent - I am doubtful he could get anyone to do my job in the way I do it so therefore it must be worth paying more for!!

sillysausage237

Robertpestonrules wrote: »

How is the "going rate" worked out?

In view of your husband being a contractor working through his own company, has he been warned about IR35 by the accountant?

I'm not saying he is going to pay me £6,000, I'm just saying that this imo, is a realistic part-time wage for someone working 10 hours per week, particularly in London. In my last part-time job I worked a little more than this many hours per week and got paid slightly more than £6,000.

Yes, he is well aware of IR35 and has all his contracts checked by solicitors prior to them starting to make sure they are outside IR35. He also has professional indemnity insurance etc.

BoGoF wrote: »

The question to ask is whether you way pay someone to come in and do the work you are doing for 10 hours a week and pay them £6000 for it, if so fine.

I don't know how long it will take me yet to do the work mentioned, but yes, if it does take that long, then I would definitely consider paying someone that amount to do the work. In London it would probably be considered cheap.

johnllew

If your recently appointed accountant suggested you do this, why not ask him/her to clarify? Surely that's what you're paying for?

Pennywise

The need to be "doing" the number of hours at a reasonable hourly rate is not such an issue for a co sec or a director as you are an office holder and not just an employee as you bear more responsibilities as an office holder, so the remuneration for the post is more than simply the hours worked. I've never heard of an Inspector questioning the work done to support a co sec or director's wage, but they regularly question it for "wife's wages" as a mere employee.

Merlin_Accounts

I concur with Pennywise' last post - as an office holder it is not about the number of hours worked - I advocate this approach for many of my clients too.

One thing I must correct you on though is the presumption that £6035 salary is exempt from national insurance - it isn't. Only the first £5435 will be exempt (when paid over the 12 months of the tax year). There are different rules for working out ni for Directors.

The £6035 personal allowance is the tax exempt amount only but the Chancellor did not increase the nat ins threshold to match this - the new allowances were brought in as an emergency measure following the furore from the droping of the 10% incoem tax band (but this is another story!!).