Assigning Officers in Ltd Co.

[ZoeBunny]

I'm a newbie here, so pleasure excuse my ignorance...

I am in the process of setting up my Ltd. Co and need a bit of help. I need to appoint a secondary officer (Director/Co. Secretary) and would like to use my partner as this. However, he is currently employed PAYE and I am not sure how this would effect him tax wise etc.

Can I have him as a second Director, with zero shares (hence not on payroll) or would he have to be the Secretary????

Any advice would be greatly received

[Ardesco]

Just set him up as company secretary and give him some shares. If you don't pay him any money it has no effect on his tax status, however if you give him some shares at the start you can potentially give him a dividend in the future if it becomes a tax efficient way to extract money from your company.

Note that I say potentially, the government is still fighting the Arctic S660 case as far as i'm aware where they are trying to plug this loophole, but they should loose.

[ZoeBunny]

I thought that if I give him some shares I would have to pay him?!?

He already earns over the 40% tax threashold so not sure how extracting money out via him would benefit either of us, but wanted to cover all bases just in case he goes on contract himself in the future - hence preferring the Director option if its workable... Would leave me to worry about the Co. Secretary bit.

[Mordac]

the government is still fighting the Arctic S660 case as far as i'm aware where they are trying to plug this loophole, but they should loose.

They should lose, but I bet they bloody don't...

[Mordac]

I thought that if I give him some shares I would have to pay him?!?

He already earns over the 40% tax threashold so not sure how extracting money out via him would benefit either of us, but wanted to cover all bases just in case he goes on contract himself in the future - hence preferring the Director option if its workable... Would leave me to worry about the Co. Secretary bit.

If your accountant is not answering questions like this, maybe it's time you started looking for another accountant, before things get serious.

[ZoeBunny]

No it's ok - haven't asked him yet... was just interested in your opinions as to how to do it

Will be using one of Simon @ SJD's guys and know that I can trust them to 'do the right thing'

[Ardesco]

I thought that if I give him some shares I would have to pay him?!?

Nope, have you ever bought shares before? If so has the company you bought shares in ever paid you a wage?

If you give him shares you have the option to pay him a dividend if you decide to pay all of your shareholder a dividend at some point in the future, but you don't ever have to do this.

He already earns over the 40% tax threashold so not sure how extracting money out via him would benefit either of us, but wanted to cover all bases just in case he goes on contract himself in the future - hence preferring the Director option if its workable... Would leave me to worry about the Co. Secretary bit.

If it is your LTD Co I would suggest setting yourself up as a director, if you need to make him a director at some point in the future all you need to do is have a board meeting put forward a motion to make him a director and approve it. Write some minutes and hand them over to your accountant and let him do the rest.

As Mordac said your accountant should really be able to answer all of this for you. If he can't look for another accountant.

Here are some links:

http://www.brutoncharles.co.uk/

[DaveB]

I thought that if I give him some shares I would have to pay him?!?

He already earns over the 40% tax threashold so not sure how extracting money out via him would benefit either of us, but wanted to cover all bases just in case he goes on contract himself in the future - hence preferring the Director option if its workable... Would leave me to worry about the Co. Secretary bit.

No, just because he has shares doesnt mean you have to pay him any kind of salary.

What it does mean is that when you do pay dividends that they must be paid in proportion to the shareholding. So if you have 2 shares and he has 1 - which is typically the way to do it - then you must pay 2rds of the total dividend to yourself and one third to him.

Dividends are trated as having been taxed at the CT rate already - %19 - so your partner would have to pay additional tax on top of that to bring it up to his 40% tax bracket. SJD will be able to tell you the exact figures.

In your case, since your partner has no tax allowance left to take advantage of I can't see it being worth your while to do this right now.

[ZoeBunny]

Thanks for the advice...

I'll just 'stick him on' as company secretary and appoint him director if/when the need ever arises.

[Lockhouse]

Thanks for the advice...

I'll just 'stick him on' as company secretary and appoint him director if/when the need ever arises.

Sounds reasonable to me.