Bit of a One-Off

[pr1]

i think nluk is just miffed that mrs nluk earns too much for him to be efficient with his company money in this way, meaning he's building up a massive war chest he can't spend until he's 80 because he'd rather die tomorrow than give the tax man a penny more than he has to

just my opinion

[nato]

It is a fortunate position to be in and I can only imagine how much it hurts to see the war chest grow knowing its going to cost a fat wad to get to it... just think of the retirement though.

[WordIsBond]

Any advice on a HMRC friendly dividend split? 70/30 sound sensible considering her services

After the Arctic Systems case, any split you want is HMRC friendly, as long as her shares have the same voting rights, etc, and you don't do any stupid dividend sacrifices or anything like that.

The best split for you depends on a lot of factors like how bullet-proof your marriage is, and whether either of you has outside income beyond what you've told us.

Ideally, if the marriage is completely secure, you want the split that allows the maximum dividend payment without either of you hitting higher rate tax. The calculation is pretty simple. For each of you (next year), the amount available for dividend is £42K minus any other income you have. If she has £6K child minding profit and you have no other income, for example, optimal spouse's dividend would be £36K and optimal personal dividend would be £42K.

The optimal share split for the spouse is (optimal spouse dividend) / (optimal spouse dividend plus optimal personal dividend). Using the example numbers I gave, that would be 46%. So use 40 or 45 or 50.

If you expect outside income for either of you to change (maybe you think she quits child minding after a year or two?), then you might want to adjust those percentages now so you don't have to mess with it later.

[northernladuk]

i think nluk is just miffed that mrs nluk earns too much for him to be efficient with his company money in this way, meaning he's building up a massive war chest he can't spend until he's 80 because he'd rather die tomorrow than give the tax man a penny more than he has to

just my opinion

Not at all. It miffs me when new guys come in questioning how much tax they can save using their wife as a tax mule which is the wrong approach. It's not a right, it has to be justifiable and in a majority of cases it's far from that which brings risks that can outweigh the savings. I'll always play devil's advocate in these situations. If people DGAF about doing this properly then why do they bother with IR35, 24 month rule, claiming any old course through the company etc.

I'll always point out the rules around this like a belligerent old sod and when they've got their head around it it's up to them to manage the risk. Just saying yeah sod it pay her the max is very poor advice IMO.

[MrMarkyMark]

he'd rather die tomorrow than give the tax man a penny more than he has to

@pr1, you always seem very concerned with others taxation levels, rates etc. to the point of having a complex.

You don't come from a long line of family HMRC employees do you?

So, I have to ask, as the good citizen that you are, comrade, do you pay the taxman more than you have to?

[pr1]

@pr1, you always seem very concerned with others taxation levels, rates etc. to the point of having a complex.

You don't come from a long line of family HMRC employees do you?

So, I have to ask, as the good citizen that you are, comrade, do you pay the taxman more than you have to?

you seem very concerned with me, you're like a lost puppy following me around these boards

if i did, would it change anything? this is a public forum afterall...

[MrMarkyMark]

you seem very concerned with me, you're like a lost puppy following me around these boards

Maybe I feel sorry for you, treacle.

I'll ask again:-

do you pay the taxman more than you have to?

[pr1]

Maybe I feel sorry for you, treacle.

I'll ask again:-

do you pay the taxman more than you have to?

yes

[MrMarkyMark]

yes

So you pay as much as a perm would, in the terms of taxes, NI etc.

If so, I take back any criticism I previously had, you must be running a charity.

[pr1]

So you pay as much as a perm would, in the terms of taxes, NI etc.

If so, I take back any criticism I previously had, you must be running a charity.

you don't have to be running a charity to want to take out & spend more than the basic rate tax limit, especially if you want to live a little