Employing your spouse

The benefits of transferring income to your spouse.

At Blue Spire we can advise businesses in the Chichester & Brighton area on the possible tax advantages of employing your spouse in the firm. Here is an overview of the issues.

When considering the overall tax position of your family, it is worth considering employing your spouse in your business.

This is a means of transferring income from you to your spouse. It is likely to show a tax saving if your spouse has unused personal allowances or pays tax at a lower rate than you do.

In order to justify a salary, the following points must be borne in mind:

  • the level of salary must be commercially justifiable
  • the salary must actually be paid to your spouse (and therefore affordable for you)
  • the National Minimum Wage/National Living Wage regulations are likely to apply

As well as a salary, you may be able to pay premiums for a special pension arrangement for your spouse. These should not be taxable on your spouse and should save you tax as a business expense.

All the above considerations apply equally to an unmarried partner or indeed to any other individual.

Administering a salary

If your spouse has no other employment, a Starter Checklist should be prepared with the Statement A ("This is my first job since last 6 April …") ticked. You may then pay up to the Primary Threshold for employees' national insurance (£157 per week for 2017/18 ) without any further formality.

If you already have a PAYE scheme for other employees, or don't mind setting up a scheme for your spouse, you should consider the following points:

  • a salary between £113 and £157 per week will protect an entitlement to basic state pension and other contributory benefits without incurring an actual national insurance liability
  • a salary between £157 and £866 per week is subject to employee's national insurance at 12% and employer's national insurance at 13.8%
  • the income tax position depends on your spouse's personal circumstances
  • the amount of salary exceeding £866 a week is subject to employee's national insurance at 2% and employer's national insurance at 13.8%, without upper limit
  • employee's (but not employer's) national insurance contributions stop when the employee reaches state pension age.

Please give us a call if there are any points you would like to discuss.

If you are in the Chichester & Brighton area and are considering employing your spouse in your business, Blue Spire can advise you of the tax advantages and other implications.


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Contact Chichester Office

Tel: +44 (0)1243 781234
Fax: +44 (0)1243 791770
Email: chichester@bluespiregroup.com


Contact Brighton Office

Tel: +44 (0)1273 739533
Fax: +44 (0)1273 732844
Email: brighton@bluespiregroup.com

Chichester Address
Cawley Priory, South Pallant, Chichester, West Sussex PO19 1SY

Brighton Address
5th Floor Intergen House, 65-67 Western Road, Hove, East Sussex BN3 2JQ

Blue Spire Limited is Registered to carry out audit work in the UK and Ireland and regulated for a range of investment business activities by the Institute of Chartered Accountants in England and Wales C004152645. Professional indemnity insurance is provided by Royal & Sun Alliance Insurance Plc 9th Floor, One Plantation Place, 30 Fenchurch Street, London, EC3M 3BD and its territorial coverage is worldwide (excluding United States/Canada).
Blue Spire Financial Planning Limited is authorised and regulated by the Financial Conduct Authority. FSA register https://www.fca.org.uk/register reference 566257. This guidance and/or advice contained within this website is subject to the UK regulatory regime, and is therefore targeted at customers based in the UK