Income Shifting - help needed
+ Reply to Thread
Page 1 of 2 1 2 LastLast
Posts 1 to 10 of 12
  1. #1

    Nervous Newbie


    Join Date
    Sep 2011
    Posts
    5
    Thanks (Given)
    0
    Thanks (Received)
    0
    Likes (Given)
    0
    Likes (Received)
    0

    Default Income Shifting - help needed

    My current situation

    Just started contracting 5 months ago

    Company was set up with 1 Share

    I am not married

    I am the director - currently no sec

    I am currently being advised to take only dividends for the remaining tax year - With is fine.

    THE QUESTION

    Can I create more shares in the company and split 60/40 with my mum or sister who earn below the higher rate band.

    So i can pay dividends to my self and mum/sister ?

    Advise and solutions needed on the above

    Thanks

  2. #2

    Fingers like lightning


    Join Date
    Mar 2009
    Posts
    751
    Thanks (Given)
    0
    Thanks (Received)
    5
    Likes (Given)
    2
    Likes (Received)
    8

    Default

    Quote Originally Posted by eltoro View Post
    So i can pay dividends to my self and mum/sister ?
    The answer, as with most things, is yes... you can.... whether or not it's a good idea is another question completely.

    I'd suggest reading this http://forums.contractoruk.com/accou...ot-spouse.html

    There will be plenty of other threads for your viewing pleasure if you search........

  3. #3

    Faqqed Off

    TheFaQQer's Avatar
    Join Date
    Oct 2006
    Posts
    36,015
    Thanks (Given)
    372
    Thanks (Received)
    1267
    Likes (Given)
    3628
    Likes (Received)
    3152

    Default

    Quote Originally Posted by eltoro View Post
    THE QUESTION

    Can I create more shares in the company and split 60/40 with my mum or sister who earn below the higher rate band.
    Yes

    Quote Originally Posted by eltoro View Post
    So i can pay dividends to my self and mum/sister ?
    Yes, if they are shareholders

    Quote Originally Posted by eltoro View Post
    Advise and solutions needed on the above
    It's a really bad idea. Spouses are a special case - read up on the Arctic case to get the definitive answer. Having shareholders in the way that you provide would fall foul of the Ramsay principle - there is no legitimate reason for this, other than to reduce your personal tax due.

    If you go ahead, then any income that falls foul of this would be taxed as PAYE and need NI paying on it as well.

    Ask your accountant - if they come up with a different answer then get it in writing and stick it on here.
    Best Forum Advisor, 2014
    Work in the public sector? You can read my FAQ here
    Click here to get 15% off your first year's IPSE membership

  4. #4

    Contractor Among Contractors


    Join Date
    Nov 2006
    Posts
    1,226
    Thanks (Given)
    10
    Thanks (Received)
    20
    Likes (Given)
    205
    Likes (Received)
    116

    Default

    My understanding is that you should not do this with your mother/sister etc, but you might find this useful reading? http://www.nixonwilliams.com/images/...20Shifting.pdf

  5. #5

    Super poster


    Join Date
    Feb 2010
    Location
    London, UK
    Posts
    3,996
    Thanks (Given)
    36
    Thanks (Received)
    29
    Likes (Given)
    153
    Likes (Received)
    89

    Default

    Quote Originally Posted by eltoro View Post
    Can I create more shares in the company and split 60/40 with my mum or sister who earn below the higher rate band. So i can pay dividends to my self and mum/sister ?
    Yes you can, but it will be THEIR MONEY not yours! If you are doing it to avoid tax and they will give the money straight back to you then that's going to be a bad idea and you will all get into trouble if (when) you get investigated.

    Also be aware that it will complicate their tax affairs and they will have to do a self assessment tax return too.

    All things considered, it's probably not a good idea unless you are genuinely running a family business.

  6. #6

    My post count is Majestic

    northernladuk's Avatar
    Join Date
    Mar 2009
    Posts
    33,260
    Thanks (Given)
    136
    Thanks (Received)
    1360
    Likes (Given)
    1731
    Likes (Received)
    5822

    Default

    Quote Originally Posted by Wanderer View Post
    Yes you can, but it will be THEIR MONEY not yours! If you are doing it to avoid tax and they will give the money straight back to you then that's going to be a bad idea and you will all get into trouble if (when) you get investigated.

    Also be aware that it will complicate their tax affairs and they will have to do a self assessment tax return too.

    All things considered, it's probably not a good idea unless you are genuinely running a family business.
    Very good point made by Wanderer that is often missed in these cases. The intial question of can you isn't the full situation. You could split it yes but can they give you it back. Absolutely not. If you want to give 40% of your wage away then go for it but in in 100% of cases that isn't what is intended.
    'CUK forum personality of 2011' - Winner - Yes really!!!!

  7. #7

    TykeLike

    SimonMac's Avatar
    Join Date
    Aug 2010
    Location
    God's Own Republic Of Yorkshire
    Posts
    22,146
    Thanks (Given)
    226
    Thanks (Received)
    1118
    Likes (Given)
    806
    Likes (Received)
    2965

    Default

    Are you from Norfolk so your sister is also your wife? If not avoid, I am looking at alternative way's of getting money out of the company, currently thinking the company car route so all insurance, servicing and maintenance is taken care off as long as you pick the right car
    “Live a good life. If there are gods and they are just, then they will not care how devout you have been, but will welcome you based on the virtues you have lived by. If there are gods, but unjust, then you should not want to worship them. If there are no gods, then you will be gone, but will have lived a noble life that will live on in the memories of your loved ones.”

    ― Marcus Aurelius

  8. #8

    My post count is Majestic

    northernladuk's Avatar
    Join Date
    Mar 2009
    Posts
    33,260
    Thanks (Given)
    136
    Thanks (Received)
    1360
    Likes (Given)
    1731
    Likes (Received)
    5822

    Default

    Quote Originally Posted by SimonMac View Post
    Are you from Norfolk so your sister is also your wife? If not avoid,


    And if she is your advice would be???
    'CUK forum personality of 2011' - Winner - Yes really!!!!

  9. #9

    TykeLike

    SimonMac's Avatar
    Join Date
    Aug 2010
    Location
    God's Own Republic Of Yorkshire
    Posts
    22,146
    Thanks (Given)
    226
    Thanks (Received)
    1118
    Likes (Given)
    806
    Likes (Received)
    2965

    Default

    Quote Originally Posted by northernladuk View Post


    And if she is your advice would be???
    If she is the HMRC will be the least of your problems, what are the medical bills for children with webbed feet and a having a tail these days like? Although when Global Warming comes and the lowlands like Norfolk are flooded having webbed feet will probably be an evolutionary advantage
    “Live a good life. If there are gods and they are just, then they will not care how devout you have been, but will welcome you based on the virtues you have lived by. If there are gods, but unjust, then you should not want to worship them. If there are no gods, then you will be gone, but will have lived a noble life that will live on in the memories of your loved ones.”

    ― Marcus Aurelius

  10. #10

    Nervous Newbie


    Join Date
    Sep 2011
    Posts
    5
    Thanks (Given)
    0
    Thanks (Received)
    0
    Likes (Given)
    0
    Likes (Received)
    0

    Default

    Thanks for your advise guys

    Maybe not a good idea!!!!!!! anyone got any other good way of extracting money with as little tax as possible!

+ Reply to Thread
Page 1 of 2 1 2 LastLast

Tags for this Thread

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts

Content Relevant URLs by vBSEO 3.6.0 ©2011, Crawlability, Inc.