Employing a Spouse or Family Member in Your Company

Thinking about processing a spouse to your company payroll? It's one of the questions we're asked most often by contractors operating through their own Personal Limited Company, and it's a good one to ask. Done properly, employing a family member can be a genuinely tax efficient way to reward work that's actually being done for the business. The key is getting the detail right from the start, and that's where we're well placed to help. Here's everything you need to know.

Am I allowed to employ my spouse or a family member?

Yes. There's no barrier to employing a spouse or family member in your company. As a director, it's your decision who you employ, and in many cases a spouse may also serve as a fellow director. The one condition that always applies is that the role must be genuine and carried out for the benefit of the business.

How much can I pay them?

That's for you as a director to decide, but Revenue's position is clear: the salary should reflect the work actually done.

A useful way to sense check the figure is to ask what salary you'd advertise if you were hiring externally for the same role. That's the standard Revenue expects you to apply.

What rate of PRSI will my spouse or family member pay?

In most cases, we recommend that your spouse pays Class S PRSI (the directors' rate) rather than Class A. Bif you do so and because the role is not treated as insurable employment under Class A, no Employer's PRSI is due on their salary, which keeps the cost to your company down.

Please note that if your spouse acts only as the company secretary solely and are not registered as a director, they will normally pay Class A PRSI.

Are they entitled to the Employee Tax Credit?

No. The Employee Tax Credit is not available to a spouse or family member employed in this way. However, they will be entitled to the Earned Income Credit, which is €2,000 for 2026.

Do they need to file an Income Tax return?

Not necessarily. A separate Income Tax return is only required if they are a director and control more than 15% of the business. In most cases, they will be assessed jointly with you.

Can Revenue review the salary I pay my spouse?

Yes. Revenue can and do review these arrangements to confirm that payments are genuinely going to the spouse and not simply being redirected back to the contractor. That's exactly why having the right paperwork in place matters.

Staying Revenue compliant

If you're employing a spouse or family member, these three steps will help keep you on the right side of Revenue:

1. Draw up a clear job description outlining their role and responsibilities.
2. Agree a salary that genuinely reflects the work they do, benchmarked against what you'd pay an external hire.
3. Make sure payments go directly to their own bank account, or to a joint account held by both of you.

One thing to remember

You can only employ a spouse or family member through your own Personal Limited Company. It isn't possible to do this through an Umbrella company, so if it's something you're keen to explore, it's worth having a conversation about the right company structure for you. Find out more about our Personal Limited Company solution if you’re interested in switching to this solution, or reach out to our team if you do wish to organise a consultation to discuss the solution further.

Every situation is a little different, so the best approach always depends on your own circumstances. Have a chat with your account manager and we'll make sure it's set up correctly from day one. Get in touch with Icon Accounting.