Best Tax Efficient Way To Stay Under The Higher Tax Band In 2016/2017

[pr1]

And 8k for filing receipts won't wash.

citation required

[WordIsBond]

citation required

Queue NLUK "tax mule" comment.

3. 2. 1....



Love ya, NLUK. Really.

[northernladuk]

Try that instead.

And don't worry too much about NLUK on this, the rules about giving shares to your wife are very relaxed. And HMRC are very unlikely to challenge a nominal salary for a wife, because there just isn't much money in it for them, and it is too hard for them to prove she shouldn't get the salary (unless you are an absolute moron in what you tell them).

"Oh, yeah, my wife does nothing in the company, I just pay her to save taxes." Who would say that?

"My wife covers the phones for me, files paperwork, gives advice on which contracts I should accept, helps arrange my business travel, blah, blah, blah. She is always available to help with these things whenever I need it, and to get that kind of a personal assistant who is on call that often would be very expensive. I should probably pay her more, actually, but instead I've given her shares."

Yeah, that's what you'd say. And are they going to drag you into court to say, "He paid her £8K when it really should have only been £4K"? And then the case is thrown out because they are being sexist and trying to claim you are overpaying a woman? LOL. Not likely.

Yep share allocation is so relaxed so it can be abused and you can spin a total lie to get out paying her for nothing. All good and proper that innit.
Not likely? Retrospective taxation of loan schemes wasn't likely either.

Change from 40/60 to 49/51 specifically to make use of the tax arrangements? Did your accountant also advise that this is what GAAR was designed to address?

According to the guidance, GAAR will apply to any tax arrangement which could be considered ‘abusive’. This would include “any arrangement which, viewed objectively, has the obtaining of a tax advantage as its main purpose or one of its main purposes”.

I love this topic

[LondonManc]

She's gonna have a hard time doing that. She's round mine Tuesday and Wednesday and she ain't doing no painting.

Given you're working, I hope you've got the webcam set up for when her and NLYUK get it on.

[northernladuk]

citation required

Sadly you've got me there. Common sense doesn't really apply.

[jamesbrown]

Simple enough:
1. As of right now, it will be best in 2016-17 for a two director husband-wife company to pay salary of £11K and claim Employment Allowance.
2. There is a consultation which could result in that changing, in which case EA won't be available, and the best salary will be £8060. We'll be in touch if that happens.

Unless an accountant thinks his clients are idiots, he can make that kind of recommendation right now.

But then, given some of the comments we see on this forum, I suppose we could assume that every accountant has some idiot clients. So maybe you are right and they shouldn't make any recommendations yet.

Yeah, but that isn't a position. I'm afraid, as you gathered, the average punter needs to be told what to do and then have it done for them, they don't want a menu.

Also, depending on how the consultation is translated into legislation, I wouldn't mind betting that it isn't black/white at all and a judgement will be required. Afterall, the legislation was specifically intended to address this sort of nonsense (even if they are failing miserably in practice).

[WordIsBond]

Yep share allocation is so relaxed so it can be abused and you can spin a total lie to get out paying her for nothing.

Conflating. There is virtually no restriction on giving your wife equal-rights shares in the company. "Paying her for nothing" is about salary. These are two different things. And this is why I said give her a role and a salary appropriate to the role.

One thing to note on all this -- if you make your wife an employee (rather than a director) to pay her a salary, then you have to deal with pension AE, which is going to cost you more hassle than the Employment Allowance is worth. If you make her a director, then you don't have to do AE, but you'll probably be ruled ineligible for the Employment Allowance within a year or two at the most. So as I said above, if you are doing this for the Employment Allowance, it really isn't worth it.

[PerfectStorm]

Remember one massive key point - the 7% hike means it's not 'efficient' to take out any dividends above 5k unless you need them - as any bank interest will get wiped out by the 7%. So get a good business savings account

[WordIsBond]

Also, depending on how the consultation is translated into legislation, I wouldn't mind betting that it isn't black/white at all and a judgement will be required.

There goes my faith in those who write legislation in this country.

For the 17,346th time.

[WordIsBond]

Remember one massive key point - the 7% hike means it's not 'efficient' to take out any dividends above 5k unless you need them - as any bank interest will get wiped out by the 7%. So get a good business savings account

This ignores reality, which is that dividend tax rates are only going to go up. So it is efficient to get as much out as you can at the 7.5% rate before it's too late.