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Remuneration in 2024/25

Shared from Tax Insider: Remuneration in 2024/25
By Chris Thorpe, June 2024

Chris Thorpe looks at what to watch out for with regard to paying employees and directors. 

When considering the tricky matter of remuneration planning, there are two things to consider; the amount of remuneration, and what form it takes.  

How much? 

The amount employees receive should be commensurate with their employment duties for the employer to claim tax relief on the salary. The payments must have been incurred ‘wholly and exclusively’ for the purposes of the trade, profession or vocation (per ITTOIA 2005, s 34 and CTA 2009, s 54). If the level of salary is higher than the job warrants, HMRC could deem the excess to be an effective gift, a non-business payment, and thus not deductible for the business. This may be more likely to happen in family businesses where family members are employed, and the notion that these bounteous payments might be made is.

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