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Paying DH small sum tax free through company

(4 Posts)
PermaShattered Wed 07-Sep-16 22:30:49

I've googled but can't find the info I need! I understand that under new(ish) rules someone can earn a small amount (up to £600ish/month?) tax free from a 2nd job/role even if employed/paying tax.

My DH does banking etc for me/my company which is a great help. He's also employed by a seperate unrelated company. So i understand i can actually pay him for doing it without him having to pay income tax on it. Can someone explain/tell me im right/wrong, whatever?!

Torrenueva Wed 07-Sep-16 22:44:44

Is this under the new dividend regime? From April 16 individuals have a £5k tax free dividend limit (forming part of your basic rate band). So, if you were to make him a shareholder and pay £5k pa as a dividend from the company there would be no tax liability arising.

IceMaiden73 Thu 08-Sep-16 00:33:03

If you pay him anything then it is income, and could be subject to tax, and possibly NI

If you have a limited company and he is a shareholder, then some of the dividends may be tax free, depending on his other income

You need to take advice from your accountant

Badbadbunny Thu 08-Sep-16 08:45:24

It's always been the case that you can pay someone from your business as long as they actually do some work and the pay levels are reasonable. Nothing new has happened re payroll. You/your business get tax relief on the expense, the employee is liable to tax on the wages they receive - likely to be the same rate unless the employee is currently earning less than the personal allowance of £11k or your business is highly profitable and you're paying higher rate tax, otherwise not much point.

As said by others, there is a new rule re dividends, the first £5k being tax free but he'd need to be a shareholder and have the right percentage of shares to equate to £5k in proportion to your share of the dividends, so can get quite complicated. Also beware it may push him into higher rate tax if his current earnings are close to the threshold as the £5k uses up some of the basic rate band.

I'd agree you're best talking to your accountant - very easy to get it wrong and end up worse off!

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