Can I give wife £20,000 bonus
Discussion
Wanting £20,000 out of my limited business instead of chipping into savings for an extension. Can I just pay my wife who works for me (at £650 take home pay a month on paye) £20,000 take home bonus and apart from paying the tax it`ll be all above board.
Note: She isn`t a director of the business, that`s just me and I take the amount that keeps me just below 40% with a mixture of wages and dividends
Note: She isn`t a director of the business, that`s just me and I take the amount that keeps me just below 40% with a mixture of wages and dividends
forest172 said:
Wanting £20,000 out of my limited business instead of chipping into savings for an extension. Can I just pay my wife who works for me (at £650 take home pay a month on paye) £20,000 take home bonus and apart from paying the tax it`ll be all above board.
Note: She isn`t a director of the business, that`s just me and I take the amount that keeps me just below 40% with a mixture of wages and dividends
Are you an MP ?Note: She isn`t a director of the business, that`s just me and I take the amount that keeps me just below 40% with a mixture of wages and dividends
forest172 said:
Wanting £20,000 out of my limited business instead of chipping into savings for an extension. Can I just pay my wife who works for me (at £650 take home pay a month on paye) £20,000 take home bonus and apart from paying the tax it`ll be all above board.
Note: She isn`t a director of the business, that`s just me and I take the amount that keeps me just below 40% with a mixture of wages and dividends
As the company director you are legally required to do things in the best interest of the company.Note: She isn`t a director of the business, that`s just me and I take the amount that keeps me just below 40% with a mixture of wages and dividends
I would suggest that giving your wife £20k that she hasn't earned so that you can build a house extension, wouldn't be covered by this
Its 2.5 times her annual salary as well... not exactly a low profile bonus is it?You might get away with it but its certainly not going to be legit....
KFC said:
As the company director you are legally required to do things in the best interest of the company.
I would suggest that giving your wife £20k that she hasn't earned so that you can build a house extension, wouldn't be covered by this Its 2.5 times her annual salary as well... not exactly a low profile bonus is it?
You might get away with it but its certainly not going to be legit....
If I could not extract the profit from my company then there would be no point running it and seven people would get the sack. Perhaps there is plenty of cash in the company.. OP hasn't given enough info for anyone to declare that payment is detrimental to interests of company...I would suggest that giving your wife £20k that she hasn't earned so that you can build a house extension, wouldn't be covered by this
Its 2.5 times her annual salary as well... not exactly a low profile bonus is it?You might get away with it but its certainly not going to be legit....
TurricanII said:
If I could not extract the profit from my company then there would be no point running it and seven people would get the sack. Perhaps there is plenty of cash in the company.. OP hasn't given enough info for anyone to declare that payment is detrimental to interests of company...
You can always extract the profits from your company - take a wage or give out shareholder dividends. Of course the payment would be detrimental to his company - if his wife had legitimately earned the £20k then he'd have paid her it without a second thought and not came on Pistonheads and made a thread asking if he could do it...
I know everyone running a company as a one man band uses their company effectively as a personal piggy bank, to be raided as and when required. But its not the legitimate way to do it. Although like I said, you'll likely get away with it.
If you want to do it properly, give out dividends.
KFC said:
As the company director you are legally required to do things in the best interest of the company.
I would suggest that giving your wife £20k that she hasn't earned so that you can build a house extension, wouldn't be covered by this Its 2.5 times her annual salary as well... not exactly a low profile bonus is it?
You might get away with it but its certainly not going to be legit....
Not sure why this was said, you have no background info to assess if it's in the company interest or not. For all intents and purposes she could be on low salary with performance related bonuses. Many sales staff operate this way (some commission only). Please present legal evidence of this not being 'legit'?I would suggest that giving your wife £20k that she hasn't earned so that you can build a house extension, wouldn't be covered by this
Its 2.5 times her annual salary as well... not exactly a low profile bonus is it?You might get away with it but its certainly not going to be legit....
stuart-b said:
Not sure why this was said, you have no background info to assess if it's in the company interest or not. For all intents and purposes she could be on low salary with performance related bonuses. Many sales staff operate this way (some commission only). Please present legal evidence of this not being 'legit'?
Have you read the original post? Its pretty clear the money is 'unearned'. If it were legitimate sales commissions then he'd have happily paid it without the need of a Pistonheads thread.... pretty obvious whats going on. Otherwise why mention needing the money for a house extension? Stevie Wonder could see what is being attempted here To be clear I'm not saying don't do it - I"m just saying you need to go into it with your eyes open.
KFC said:
Have you read the original post? Its pretty clear the money is 'unearned'. If it were legitimate sales commissions then he'd have happily paid it without the need of a Pistonheads thread.... pretty obvious whats going on. Otherwise why mention needing the money for a house extension? Stevie Wonder could see what is being attempted here
To be clear I'm not saying don't do it - I"m just saying you need to go into it with your eyes open.
The great thing about it being LTD and not PLC is the lack of disclosure, so he doesn't have to justify it to anyone. To be clear I'm not saying don't do it - I"m just saying you need to go into it with your eyes open.
That being said, I don't entirely disagree with what you say - but consider she may have earnt it, just indirectly. There's nothing to say she's not highly educated, and simply working a very low salary to help her husband - she may be able to pull 50k+ in another job. We really don't know enough to speculate.
stuart-b said:
The great thing about it being LTD and not PLC is the lack of disclosure, so he doesn't have to justify it to anyone.
You would certainly need to justify it if the taxman was inspecting your books.stuart-b said:
That being said, I don't entirely disagree with what you say - but consider she may have earnt it, just indirectly. There's nothing to say she's not highly educated, and simply working a very low salary to help her husband - she may be able to pull 50k+ in another job. We really don't know enough to speculate.
Its a forum, all we can do is speculate from the limited info we've been given. Just because she can earn £50k elsewhere doesn't mean she's entitled to £20k+ here. I obviously don't know the specifics but if she's qualified as a nuclear scientist and he's got a ltd company as an umbrella for IT security and working as a 1 man band and paying her to do admin... there is zero chance of getting away with that £20k payment if audited. As always... don't take free advice from an internet forum on matters that could worst case see you locked up... go listen to your accountant as thats what he's paid for
stuart-b said:
Why would you need to justify it to the tax man? You pay the bonus through PAYE, and pay the NI and income taxes due - there's nothing more to say or do. Please correct me if I'm wrong.
This is a perfect example of why people shouldn't be taking tax advice from a free forum, from non qualified people. I know its well meaning but its completely wrong.https://www.gov.uk/running-a-limited-company
"make decisions for the benefit of the company, not yourself"
You can't just raid the company account because you want to build a house extension, or for any other reason. Whether the person being paid ends up paying taxing or NI on it is completely irrelevant.
Either pay the money out as dividends, or go see your accountant. Or just roll the dice and chance it and you might get away with it.
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