Plenty of family businesses run on a spouse doing the books. HMRC has no problem with that. It has a problem with fiction.

The three rules that make it work

Real work. There must be an actual job: bookkeeping, admin, answering calls, managing the website. Write down what they do and roughly how long it takes.

Commercial pay. The wage must match what you would pay a stranger for the same work. £12,000 a year for a few hours a week of bookkeeping is defensible. £50,000 is not. Anything above the commercial rate risks being disallowed as a business expense, which means Corporation Tax or Income Tax relief lost on the excess.

Actually paid. The money must move, into their bank account, through payroll. A bookkeeping entry that never touches their account is exactly the thing a tax enquiry looks for.

The tax effect, worked through

A one-director company pays the director’s spouse £12,570 a year for genuine admin work. The spouse has no other income.

• Spouse’s tax: nothing. £12,570 sits exactly on the Personal Allowance and the National Insurance primary threshold
• Employer NI: (£12,570 – £5,000) at 15% = £1,135.50
• Corporation Tax relief: (£12,570 + £1,135.50) at 19% = £2,604.05

Net family position: the company spends £11,101.46 after tax relief, the spouse receives £12,570 tax free. About £1,470 a year ahead, and it scales with the company’s profit.

National Minimum Wage

Family members working in the business are generally entitled to the minimum wage like anyone else. There is a narrow exemption for a family member living in the family home and taking part in the family business, but HMRC’s own manual says a limited company cannot have a family or a family home, so that route is closed to companies. Simplest path: pay at least minimum wage for the hours worked.

Do not forget the boring bits

Register as an employer, run PAYE, give a written statement, get Employers’ Liability insurance. Employing your spouse is employing someone.

Sources

All pages checked 20 October 2026.

• Get ready to employ someone for the first time: https://www.gov.uk/employing-staff
• NMW manual: family members (NMWM05160): https://www.gov.uk/hmrc-internal-manuals/national-minimum-wage-manual/nmwm05160
• Income Tax rates: https://www.gov.uk/income-tax-rates
• Rates and thresholds for employers 2026 to 2027: https://www.gov.uk/guidance/rates-and-thresholds-for-employers-2026-to-2027
• Corporation Tax rates: https://www.gov.uk/corporation-tax-rates

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