The doctor's wife

Doctor A is a partner in a small practice and employs his wife for general secretarial work.

A modest salary of £1 200 a year is paid which we feel is commensurate with the secretarial duties she carries out.

Doctor A also pays an employer contribution into a personal pension scheme for his wife of £100 a month.

My advice is that the amount claimed as a tax-deductible expense for the pension contributions should be restricted to £30 a month which again I feel is commensurate with the £100 monthly salary; and the balance should be treated as drawings.

Doctor A's pensions adviser is insisting to Doctor A that he is perfectly entitled to full tax relief on all of the £1 200 annual contributions actually paid (as employer) and indeed up to the £3 600 annual maximum irrespective of the salary earned ...