Salaries for family members

Self-employed - running a business and paying tax

You are allowed to claim a reasonable salary for a spouse or partner who helps in the business. Their duties could include answering the phone, going to the bank, bookkeeping and other administrative tasks. The salary must be actually paid, and must be realistic.

Keep a note of why the salary is reasonable by noting the number of hours worked and level of responsibility. For example, it would be very difficult to justify a £40,000 salary for an administrative worker who only works 5 hours a week.

If you employ someone in the business, even if they are a member of your family, you will need to operate PAYE and pay them after taking off tax and national insurance, if they earn over a certain figure. Operating PAYE can be quite complex. PAYE reporting is under RTI, where on-line submissions of payments must be made to HMRC on, or before, the day any wages are paid.