Using Wife's Personal Tax Allowance

Damian_Evans

Hi, I work for a small company and don't earn a great wage, but enough that I am not eligible for Working Tax Credit.
As with a lot of people, I hav not had a rise for four years, and things are starting to hurt. My wife does not work as we have two young children.

My question is: Can my employer put my wife on the company payroll and pay her £7475 of my salary? This way the money would not be taxable as it would use her tax free allowance.


Thanks.

System

If wife was not really working for the company, then the simple answer is No. (Ask yourself the question : Would it be tax evasion ?)

antrobus

Damian_Evans wrote: »

....
My question is: Can my employer put my wife on the company payroll and pay her £7475 of my salary? This way the money would not be taxable as it would use her tax free allowance.

Well they could. HMRC might have something to say about it though, and I suspect that the employer would likely refuse on the grounds that not attracting the attention of HMRC is a good policy.

Any

Clearly theoreticaly they could. But given that employement also creates a lot of responsibilities for the employer, such as legal rights to paid holidays and opening themselves for dismissal claims and redundancy issues, no one in their right mind would do it for just an employee... unless you are the owner of the company and you are paying your wife for her "admin" work (and then realise that you have to pay employers NI on that though) or paying her out "dividends" on the company (given that you first must give her shares, so that SHE owns part of your company).

So if you are normal employee of a small-ish company, I would defo not go and even ask for such an option. The idea is simply redundant.