Self-employed status generally results in a lower tax liability than that of employment. Firstly, the rate of National Insurance self-employed people generally pay is 9% (as opposed to 12% if employed). And secondly, the ‘employer’ does not need to pay Employer’s National Insurance on their behalf either. Of these two options, people therefore tend to prefer being treated as self-employed.
You also have the option of transferring the business into a partnership and giving your wife a share of the profits.
However, you cannot simply choose to treat your wife as self-employed/ partner/ employed- it is really a question of the facts and HM Revenue & Customs (HMRC) have lots of guidance in this area.
We would recommend that you seek professional advice about how to remunerate your wife, before proceeding. Firstly, to check you are acting within guidelines and legislation and secondly, to calculate the tax position. Please feel free to contact us if you would like to be put in touch with your local TaxAssist Accountant.