Dividend To Children As Shareholder(s)

[FMCG]

Trying to appreciate this item further as unsure even after the usual web trawl.

Can a Director distribute/pass/transfer over a portion of shares to their offspring (via using Companies House website). When process complete then declare a dividend using accepted protocol, pay via company cheque which is subsequently cashed by the child into their own account.

Would there be different tax implications depending on following scenario(s)

1. child between 14 and 16 ie under 16 years of age and at school in FTE with no NI number
2. child between 16 and 18 ie at college in FTE with own NI Number
3. child between 18 and 21 ie at university in FTE with own NI Number

Essentially, want to build up funds for them in their own account(s) in readiness for university ie not planning on taking this money from the child for myself.

[SimonMac]

Trying to appreciate this item further as unsure even after the usual web trawl.

Can a Director distribute/pass/transfer over a portion of shares to their offspring (via using Companies House website). When process complete then declare a dividend using accepted protocol, pay via company cheque which is subsequently cashed by the child into their own account.

Would there be different tax implications depending on following scenario(s)

1. child between 14 and 16 ie under 16 years of age and at school in FTE with no NI number
2. child between 16 and 18 ie at college in FTE with own NI Number
3. child between 18 and 21 ie at university in FTE with own NI Number

Essentially, want to build up funds for them in their own account(s) in readiness for university ie not planning on taking this money from the child for myself.

Don't think children under 18 can be shareholders due to the voting rules that come with shares, you could set up a trust for them though to hold and manage the shares.

If your intention is to build up their uni fund rather than tax efficiency from the company, take them in your name and stick them in Junior ISA's in their name

[northernladuk]

What did your accountant say?

[northernladuk]

Previous post on topic here

http://forums.contractoruk.com/accou...reholders.html

[jmo21]

Previous post on topic here

http://forums.contractoruk.com/accou...reholders.html

And the first reply in that thread is from you, with a link to another thread!

[FMCG]

Thanks - that 2nd link is one that I previously read through. My dilemma is the break points for the age ranges.

Wanted to avoid trusts/etc and also resolve prior to the April 2016 dividend changes.

Going to see accountant later this week.

[northernladuk]

And the first reply in that thread is from you, with a link to another thread!

Can't say I'm not consistent

[northernladuk]

Thanks - that 2nd link is one that I previously read through. My dilemma is the break points for the age ranges.

Wanted to avoid trusts/etc and also resolve prior to the April 2016 dividend changes.

Going to see accountant later this week.

I'd be interested in his response so keep us updated.

[Jessica@WhiteFieldTax]

Off the top of my head, and without any further research:

1 and 2 fail as settlement on child of parents. The effect is that the income is taxed on the parents. This may or may not be an issue for you.

3 works, but subject to wider operation of settlement legislation which doesn't seem to be enforced by HMRC with any gusto at present, but don't rely on that.

E&OE

[TheCyclingProgrammer]

I was going to say what Jessica said - over 18 (or is it 18 and over?) should be fine so long as you retain no interest in the shares or the dividends - that means the shares and dividends should be theirs to do as they please and if its held in a trust you should have no interest in the trust - if you retain an interest then it would be caught by the settlements legislation and the dividends would be taxed as if they are yours.

The first two points are automatically caught by the settlements legislation due to the rules on minor children - their shares and subsequent dividends would be taxed on the settlor/giver (i.e. you) regardless of whether you retain an interest in them (I think there's an exemption for a small amount, £100 I think, but that's it).