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Home » News & Insights » Can I Pay Wages To Family?

Can I Pay Wages To Family?

Posted on 3rd December 2021

Family Home Allowance

The definition of a connected person for tax purposes includes certain relatives, trustees, partners, and companies.

A person is connected with an individual if that person is

  • the individual’s spouse or civil partner
  • a relative of the individual
  • the spouse or civil partner of a relative of the individual
  • a relative of the individual’s spouse or civil partner
  • the spouse or civil partner of a relative of the individual’s spouse or civil partner.

The term ‘relative’ does not cover all family relationships. In particular it does not include nephews, nieces, uncles, and aunts.

When it comes to making a claim to deduct wages paid to relatives or connected persons the reason for the payment must be wholly and exclusively for the purposes of the trade. If there is another reason (either in addition or instead) then the deduction will not be allowable. There have been a number of important cases that have looked at this issue including in relation to payments made to minor children and spouses.

MJB Avanti | 08000 388799

Source: Informanagement

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Disclaimer:- The information contained herein is given by way of general guidance only and no action should be taken solely on the basis of the information contained herein. The Avanti Group (UK) Ltd will be pleased to provide further guidance on the issues, and how they might affect you. No liability is accepted by the firm for any action taken without seeking appropriate professional advice

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