Models paying a spouse or partner for work they genuinely do, and shows the household tax saved — with the point at which it stops being worth it.
On the figures so far
Pay up to their unused allowance (£12,570) — saving about £2,496 a year across the household.
Every figure came from you, and the gap is £2,496 — well outside rounding.
Refine it in 6 questions below.
The decision
Pay up to their unused allowance (£12,570) — saving about £2,496 a year across the household.
£2,496 better than pay them nothing, on the same figures.
Each of these has to be true. Where your answers settle it we have said so; where they cannot, the test is yours to check.
Your partner does real work for the business. — met, on your answers
ITTOIA 2005 s. 34; CTA 2009 s. 54 — wholly and exclusively
The amount reflects what you would pay someone else for that work. — met, on your answers
ITTOIA 2005 s. 34
The salary is actually paid to them, into their own account. — we cannot tell from your answers
ITEPA 2003 s. 18; HMRC BIM47105
It is reported through PAYE where required. — met, on your answers
Income Tax (PAYE) Regulations 2003, reg. 67B
Their total income stays inside a band where the saving is real. — met, on your answers
ITA 2007 s. 10
This is information, not tax or financial advice. It shows how the rules apply to the figures you entered — it does not know the rest of your circumstances. Worth checking with an accountant before you act.
Rates as at 6 April 2026 — the 2026/27 tax year.
The figures above are only as good as what sits behind them. These are the records HMRC would ask for.
| When | What | If you miss it |
|---|---|---|
| On or before each payday | File the RTI Full Payment Submission. | £100 a month penalty per scheme, and the payment loses its best evidence. |
| 22nd of the following month | Pay any PAYE and NI due. | Interest and escalating late-payment penalties. |
| Before the accounting year end | Pay the salary you intend to deduct this year. | Accrued remuneration unpaid nine months after the year end is disallowed until it is paid. |
| 5 April | Use their personal allowance for the year. | A personal allowance is annual and does not carry forward. An unused one is simply gone. |
Write down what they do, how often, and what it would cost to hire. Doing this first is what makes the figure defensible; doing it afterwards is what makes it look invented.
www.gov.uk/hmrc-internal-manuals/business-income-manual/bim47105
The useful band runs up to their personal allowance, then to the higher-rate threshold. Beyond that the rate they pay approaches yours and the saving disappears.
Even a small salary should go through RTI. It is the contemporaneous record that the payment was made, on the date claimed.
Business account to their personal account, on the payroll date, every time. Not a transfer to a joint account at the year end.
Their other income changes, and so does the role. A figure set three years ago and never revisited is the one that gets challenged.
Three situations, worked through. They use the same rules as the tool above, so you can check the arithmetic against a case near your own.
The clearest case: income moved from a 40% taxpayer to an unused personal allowance. The work still has to be real.
Still positive but much thinner. Once both of you are taxpayers the gain is the rate difference alone, and employer NI eats into it.
Nothing to gain and employer NI to pay. Where both partners are higher-rate taxpayers this stops being a tax question entirely.
Every figure above comes from one of these. Where we have interpreted rather than calculated, the tool says so.
A deduction is allowed only for expenses incurred wholly and exclusively for the purposes of the trade.
Excessive remuneration paid to a family member is disallowed to the extent it exceeds a commercial rate.
Earnings must be reported under RTI on or before payment.
Employer NI is due on earnings above the secondary threshold.
Remuneration accrued but unpaid nine months after the period end is not deductible until paid.
What the work is worth. There is no statutory figure. The practical test is whether you would pay a stranger the same for the same hours — if not, the excess is not deductible.
Yes. This is not a way of allocating income; it is a payment for services. HMRC's enquiries in this area start by asking what was done and when, and the answer has to be specific.
No — a different route with different rules. A dividend follows shareholding, not work, and the settlements legislation applies where shares are given rather than earned. The 'Arctic Systems' case settled that ordinary shares between spouses are usually protected by the spousal exemption, but the shares must carry full rights.
Positively, if the salary is at or above the lower earnings limit — that gives a qualifying year without any NI actually being payable. It is a real and often overlooked benefit of paying at that level.
They can still be paid for genuine additional work, but their existing income sets the marginal rate the saving is measured against, and the hours have to be plausible alongside the main job.
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