The tax advantages of employing family members in a firm may be significant. Your spouse, civil partner, or children might be eligible for lower tax rates and personal allowances. This can help you save money on your taxes as a whole. If you are considering starting a business or are already running one, it is worth exploring the potential tax advantages of employing your family members.
Salaries are a company’s primary expense, and they have the benefit of lowering the overall tax bill. The spouse and children will be taxed on their salary, but depending on their other earnings and allowances, this may still reduce your overall tax bill. Considering paying your family members a salary for their work, keep in mind that no taxes or national insurance contributions are required to pay if the salary is less than £9,880. From 6th July 2022, the threshold will be increased to £12,570, and no tax is needed to pay if the salary is less than £12,570. However, your company can save 19% of the amount paid in corporate tax.