Can I pay a partner through the business?

Yes, if your partner genuinely works in the business and the pay is reasonable for the work they do. HMRC treats family wages like any other business expense: it has to be a real cost of the business, in line with what you would pay an unrelated person for the same work.

How you do it depends on your structure:

• Sole trader: you can employ your partner through PAYE with a contract, a payslip each pay date and Real Time Information reports to HMRC. You cannot pay yourself a wage, but the wages you pay them reduce your taxable profit.
• Limited company: you can employ them in the same way and the salary is deductible for Corporation Tax. Another option is to make them a shareholder so they can receive dividends, but arrangements built mainly to save tax can be challenged by HMRC, so take advice first.
• Business partnership: a business partner is taxed on their share of the profits, not paid a wage.

If the pay is more than the work justifies, HMRC can refuse the deduction while your partner is still taxed on what they received. Keep a record of their duties and hours, check minimum wage rules apply, and pay them through payroll rather than from your personal account.

Legislation and guidance: Income Tax (Trading and Other Income) Act 2005, section 34 (wholly and exclusively); Corporation Tax Act 2009, section 54 (wholly and exclusively); HMRC Enquiry Manual EM3911 (family wages).