Minority shareholding to your spouse

[ChrisFromGreece]

Hi,

An article I read today suggested some tax planning ideas, including the following:

"Transfer a minority shareholding to your spouse so they can receive up to £5k of dividend tax free"

I have a couple questions on the above statement:
1) Is there a specific % I should transfer to my spouse? Would 5% do the job?
2) If my spouse is working full time and earns £30K/year, would that £5K dividends be really tax free? Or would my spouse be required to complete a self assessment and pay tax on the extra income?

Thanks,
Chris.

[SueEllen]

Talk to your accountant. That's what you hire them for.

[ChrisFromGreece]

True, and will do... just wondered if anyone had done that.

Thanks anyway.

[missinggreenfields]

Hi,

An article I read today suggested some tax planning ideas, including the following:

"Transfer a minority shareholding to your spouse so they can receive up to £5k of dividend tax free"

I have a couple questions on the above statement:
1) Is there a specific % I should transfer to my spouse? Would 5% do the job?
2) If my spouse is working full time and earns £30K/year, would that £5K dividends be really tax free? Or would my spouse be required to complete a self assessment and pay tax on the extra income?

Thanks,
Chris.

If you give her 5% then to pay her a dividend of £5k you'd be declaring a total dividend value of £100k (with £95k to yourself). If that's the kind of dividend you intend to pay, then it's enough. If not, then it isn't.

The first £5k dividend income for her would be tax free, regardless of what her PAYE income is.

[ChrisFromGreece]

If you give her 5% then to pay her a dividend of £5k you'd be declaring a total dividend value of £100k (with £95k to yourself). If that's the kind of dividend you intend to pay, then it's enough. If not, then it isn't.

The first £5k dividend income for her would be tax free, regardless of what her PAYE income is.

Thanks that makes sense and it's a lot clearer.

Was thinking of paying £35K dividend to myself... and £5K to my spouse. As such 12.5% should do the trick.

However, if I want to pay more dividends to my self, this should be reflected to the dividends my spouse receives as well I assume.

[northernladuk]

True, and will do... just wondered if anyone had done that.

Thanks anyway.

They have, but your accountant is still the best place for you to go. Here you ask a quick question which in most cases needs a complex answer to really give you the rounded view on it and not spawn further questions. SPeaking to your accountant means they will explain it all to you as well as other stuff you never realised and need to take in to account.

Don't try and learn the basics by asking a million questions on here. Let the professional guide you.