Husband and wife / civil partners

Produced by a Tolley Owner-Managed Businesses expert
Owner-Managed Businesses
Guidance

Husband and wife / civil partners

Produced by a Tolley Owner-Managed Businesses expert
Owner-Managed Businesses
Guidance
imgtext

Background to the taxation of spouses and civil partners

‘Independent taxation’ means that husbands and wives, and civil partners, are treated as independent from one another in respect of:

  1. income tax bands

  2. personal allowances

  3. making and filing tax returns

  4. payment of income tax, and

  5. tax reliefs

The tax treatment of members of civil partnerships is aligned with that of married couples in all respects and in this note, the term ‘spouse’ is used to refer to a husband, wife or civil partner.

This guidance considers a number of potential tax savings ideas and potential pitfalls in relation to spouses of business owners.

Remuneration paid to spouse

It makes sense to pay sufficient remuneration to family members to utilise their personal allowances and basic rate tax bands. Further details of optimising the tax position on the payment of salaries can be found in the Salary v dividend guidance note. In addition the company could be eligible for the employment allowance which is available to most small employers, including companies

Continue reading the full document
To gain access to additional expert tax guidance, workflow tools, generative tax AI, and tax research, register for a free trial of Tolley+™
Powered by Tolley+

Popular Articles

Trade or hobby

Trade or hobbyInteraction of hobby farming rules and commercialityFarming has its own set of ‘hobby farming rules’, which historically have stated that a profit must be made every six years. This is known as ‘the five-year rule’, in that there can be five years of losses but there must be a profit

14 Jul 2020 13:50 | Produced by Tolley Read more Read more

Gifts with reservation ― overview

Gifts with reservation ― overviewIntroductionA gift with reservation (GWR) arises when an individual ostensibly makes a gift of his property to another person but retains for himself some or all of the benefit of owning the property. The legislation defines a gift with reservation with reference to

14 Jul 2020 11:48 | Produced by Tolley Read more Read more

Holdover relief for disposals by trustees

Holdover relief for disposals by trusteesOverviewWhere a capital gain has been realised on an asset that has been disposed of and that disposal was not for full value (that is not in an arm’s length sale) then holdover relief may be available. This will happen when trustees appoint capital assets

14 Jul 2020 11:54 | Produced by Tolley Read more Read more