Contractors' Questions: Any tax treats to a company secretary?

Contractor's Question: Having recently set up a limited company, I am now considering whether appointing my spouse as company secretary would be beneficial. Beyond having her help me with the books, and having someone to have a company Christmas party with, is there any advantage, relating to tax, if she was my company's secretary? The possible snag is that she is on the verge of being a top-rate taxpayer and is occupied with her associated day job for much of the working week.

Expert's Answer: Appointing your wife as a company secretary will not, in its own right, affect the tax position of your company. If you did appoint her company secretary, you would have to start paying your wife a salary at least equivalent to the minimum wage and add her to your PAYE scheme. You also mention that your wife has another job; she is therefore likely to be issued with a PAYE tax code which will deduct basic rate tax from all of the money you pay her.

Many couples choose to give shares to each other, because being paid a dividend is usually more tax efficient than a salary or bonus. It must be remembered that the automatic capital gains tax exemption on gifting shares is not available unless you are married or in a civil partnership, although there is usually the possibility of claiming relief when gifting a business asset.

The expert was Paul Spindler, a technology partner at chartered accountants Kingston Smith LLP.
 

Friday 27th Aug 2010