Avoiding a higher rate of tax on earnings

Kirsttkk

My husband is self-employed and has a limited company. His earnings go into the higher rate of tax, but he wants to use my personal tax allowance and the basic rate which means he pays the the lower rate on his earnings. Is this legal? Currently, I’m an unemployed full time homemaker. 

Mickey666

AIUI, he can't simply 'use' your personal tax allowance but it may be possible to make some sort of arrangement for his company to employ you.  He could then pay himself below the 40% band and pay you the difference.  But his company would also have to pay employers NI for you and you would also pay NI (depending on your 'earnings'), so depending on your proposed 'salary' this might not be effective overall, just an added complication.  You'll also have to convince the taxman that you're a 'genuine' employee.

TBH, this is the sort of thing (tax efficiency) your husband's accountant should be dealing with - at the very least they will be able to advise on legality.

Dazed_and_C0nfused

Kirsttkk said:

My husband is self-employed and has a limited company. His earnings go into the higher rate of tax, but he wants to use my personal tax allowance and the basic rate which means he pays the the lower rate on his earnings. Is this legal? Currently, I’m an unemployed full time homemaker. 

Do you really mean he is self employed and has a limited company. 
Or do you actually mean he isn't self employed, he is a director of a limited company?
Do you mean he wants you to apply for Marriage Allowance?  Or something else?

Jeremy535897

Assuming that the husband isn't self employed but is the owner and director of his limited company, he is probably paying himself dividends as well as salary. If he gave you some of his shares, then you would receive some of the dividends, reducing his tax liability. His company could employ you, but you would then have to carry out duties worth the salary paid.

macman

He's an employee of his own company.

Marriage Allowance is only an option here if husband can first reduce his taxable income below the higher rate level.

I agree with Mickey 666: this is something that the company accountant should be looking at a a matter of routine.

OP needs to clarify exactly what the current structure is.