ICTA88/S74 (1)(a) denies a deduction for expenditure not made
wholly and exclusively for the purposes of the trade. Where there
is both a personal and a business relationship between the payer
and the recipient the expenditure may fail this test.
You should consider all the facts and circumstances of a particular case and allow a deduction where it is justified by the facts. Factors which may be relevant in considering a case where payment is made to a spouse or civil partner include:
Where a deduction is claimed for payment at the commercial rate
in respect of substantial duties performed at premises away from
the family home it is very likely that the deduction is allowable.
Conversely, where payment at a non-commercial rate is made in
respect of minor services performed at the family home a deduction
is unlikely to be justified. Between these two extremes there are a
variety of circumstances where the conclusion turns on a detailed
examination of all the facts.
The general issue of wages that are not wholly and exclusively for the purposes of the trade is discussed at BIM37700 onwards.