Employing a spouse in a business

[Orangesandlemons77]

I have seen some people mention that e.g. their DH employs them to use their tax free amount in a business

Does anyone do this and how does it work / do you find it please?

I suppose they could also employ DC over 16, e.g. in family businesses?

Yep.

You're missing the fundamental point. Re your footballer example, that's a negotiation at open market value between unconnected people. The football club wouldn't pay a player so much if he wasn't worth it.

Completely different set up between "connected parties" such as husband and wife which clearly isn't "open market". Hence why there are special rules enshrined within tax law when it comes to transactions between connected parties that aren't at open market value. Such as a husband paying his wife £12k per year for sod all. In a tax enquiry, it just doesn't wash! It gets disallowed as it can't satisfy the over-ruling "wholly and necessarily" test which applies for all business expenses allowability. It can't be "wholly and necessarily" if she doesn't do anything worth that £12k. Simple slam dunk.

That's why the business owner has to be able to prove that the spouse actually does something for the business and is paid a reasonable rate for doing it - commensurate with if the role was done by an unconnected third party. HMRC aren't going to argue about whether the job is worth £10 per hour or £20 per hour as that's "real life negotiation", but they'd certainly argue her being paid £100 per hour for basic admin as that's way outside open market rates and disallowed when the business owner could go to the open market and pretty easily find someone competent to do it for far less money.