This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our privacy notice.

Employing family members and settlements legislation

By Chris Thorpe, March 2021

Chris Thorpe looks at issues of involving members of the family in the business and the potential minefields. 

In February 2012’s edition of Tax Insider, Sarah Laing wrote an article about employing family members i.e. putting their wages through the books and claiming the tax deduction. The upshot of the article was that provided they are working as genuine employees, such that the expense is wholly and exclusively for business purposes, then it is perfectly acceptable. Indeed, within a family-run business there is often little option, but it allows more tax-deductible money to stay within the family.  

Sarah did touch upon one tax planning idea for limited companies which takes the notion a little further – instead of (or in addition to) paying family members a salary, give them some shares and allow them to take dividends. Everyone has a £2,000 dividend allowance, they attract no NICs and dividends

This is one of our 2006 Premium articles

To see this article in full and unlock access to our complete library of 2006 articles click 'subscribe & unlock' below:
SUBSCRIBE & UNLOCK

Subscriptions include a 14 day free trial
+ money back satisfaction guarantee

Begin your tax saving journey today

Each month our tax experts reveal FREE tax strategies to help minimise your taxes.

To get Tax Insider tips and updates delivered to your inbox every month simply enter your name and email address below:

Thank you for signing up to hear from us!