Salary for doing no work

Cook_County

Well the company won't get a corporate deduction for the cost as you won't be doing anything. As a director your husband may therefore end up in jail for fraud if this arrangement goes ahead. I suggest seeking a legal opinion.

ab7167

I have no idea what that means, which to my mind means that we shouldn't be doing it if I can't understand it. Simples. If it may also be illegal, we definitely shouldn't be doing it. Also, if it were legal I guess more people would do it! And I had never heard of it before, it was just suggested (I think in the pub one night) as a possibilty, although I don't think anyone there knew of the implications.

Probably at least saved myself the cost of consulting a professional only to be told we shouldn't be doing it...

BoGoF

Down the pub !!.....says it all

heretolearn_2

Yes, if you were just transferring some of a directors salary to a partner in exchange for no work, that is illegal tax evasion, and a little trick the HMRC are very well aware of. Lots of people do it though, you are just hoping not to get caught out, and if there is no other reason for the HMRC to investigate the firm, then you probably wont. But you might. This is an area they have tightened up on.

The rule is strictly that a directors partner (or other family member) MUST be actually working in return for that money.

The problem you have in proving that is that you are not being taken on as an employee with your own salary in your own right, in addition to what your OH does and earns. You are clearly and obviously diverting part of the salary HE earns just to avoid tax. Good luck in explaining to the HMRC why OH takes a pay cut (while doing the same work) that just coincidentally matches the salary you as a new employee are getting.

So, you all need to think about this a bit more. If the firm will pay you in addition to your OH, ok. But just diverting some of his money to you won't work. Perhaps you could wait until he is due a pay rise?

Kate78

OP, what is your opinion of MPs "employing" family members to lower their tax bills?

Fiddlestick

Kate78 wrote: »

OP, what is your opinion of MPs "employing" family members to lower their tax bills?

They don't.

They are either paid through the allowance they get from office expenses or they employ them in a personal capacity and then pay them out of their own pocket from their net salary.

If they pay them out of pocket, the MP pays tax on their income and then once it's paid to the family member it again is liable for income tax.

There is no tax bill being lowered and in fact, so long as the family member is doing an actual job and is actually helping to run the office, I have no problem with this.