The employment of a family member or spouse is a question that commonly arises. Below are the FAQ’s in relation to the employment of spouse or family member.
Am I legally allowed to employ spouse/family member in my company?
Yes. There is no legal impediment to stop you employing a spouse or family member, it is up to the Directors to decide who they employ. In many cases a spouse may be a fellow director. However the sole purpose of the expense must have been for the purposes of the business.
How much can I pay them?
Whilst it is up to the directors to decide, Revenue say that
Where the duties are genuinely performed remuneration is commensurate with the work and time devoted to the tasks
A good question to ask is
How much would I state as salary if I was to advertise the role?
What rate of PRSI will my spouse pay?
Generally speaking your spouse will pay Class S PRSI, therefore its not considered to be insurable under Class A and no Employers PRSI is liable.
Does my Spouse or family member get the Employee Tax Credit?
No this is not available to them, however the will be entitled to the Earned Income credit. This is €1,500 in 2020 (Employee Credit is €1650)
Is my Spouse Obliged to file an Income Tax return?
Only if they are director and control more than 15% of business, in many cases they will be assessed under the joint assessed system with you
Can Revenue Review the wages paid to a spouse/family member?
Yes – Revenue will want to make sure that a payment is actually going to the spouse and not the individual or somebody else
Can i employ a spouse/family member in my Umbrella company?
No - it is not possible to do this, you will need to set up your own Personal limtied company to do this
What happens if Revenue deem the amount i pay too much?
Revenue will disallow the difference between what they feel the amount should be and what you paid them and tax the difference.
How do I ensure I am Revenue compliant when employing spouse?
- Draw up a job description of their role and duties
- Agree a salary commensurate with the role.
- Ensure the payment is made to Spouse’s bank accunt or a joint account held by you both.
If you have any questions on employing a family member don't hesitate to contact your account manager or call us on 01 8077106, we would be happy to arrange a consultation with one of our Accountants