Shoving some dividends into the missus

[LondonManc]

FTFY

Oh the kitchen has pots, don't 'kin worry about that!

[Lost It]

I do the same.

Problem with me is easy come easy go (That's why I have 5 Jaguars, two motorbikes, don't own a decent suit though) so I pay the missus to do all the bill paying etc. Much easier. So. I should make her a "Co director" as well then?

[MrMarkyMark]

Problem with me is easy come easy go (That's why I have 5 Jaguars, two motorbikes, don't own a decent suit though) so I pay the missus to do all the bill paying etc. Much easier. So. I should make her a "Co director" as well then?

Only 5 Jags

[northernladuk]

Problem with me is easy come easy go (That's why I have 5 Jaguars, two motorbikes, don't own a decent suit though) so I pay the missus to do all the bill paying etc. Much easier. So. I should make her a "Co director" as well then?

Dunno but am sure your accountant can advise based on details we don't have.

[d000hg]

What role does your wife have in your company? Is she a director or company secretary?

Have a word with your accountant.

She is the secretary but only because the company was founded when one was needed. The assumed route would be making here a director.

Or there's always the accountant route....

If you read my question I asked if many people here actually DID this, and if so by what means. I don't think my accountant knows that information and they wouldn't be able to tell me about your accounts I'm after anecdotal evidence whether you lot figured it was worth doing.

Also you represent more than one accountant - and we often see the accountants themselves posting varying views so the comparison is useful.

[d000hg]

My company is split 51% for me 49% for my wife so are the dividends. She also receives a salary as an employee of about 8k per year for admin work. All perfectly legal and accountant approved

I thought paying a salary for a token non-job was dodgy? Like an MP paying their kid a salary for tidying their desk once a week...

For instance I wondered if anyone had gone the different share class route as a way to gain flexibility in how much is distributed to each person... if I wanted to ensure the wife got ~£5k but didn't have to start doing a SATR I'd have to conservatively guesstimate what % of the shares she should own based on company profit in past years.

[northernladuk]

Different share classes is even worse. Most of the guides out there talking about contractor setups warn against them.

Better to get the split as close and maybe pay a little in tax if you exceed the threshold than make your self a target from the off.

[missinggreenfields]

I'm aware that one cannot just pay their partner/spouse a salary for nothing.

It depends what you define as "nothing" in terms of paying someone a salary / stipend for their role in the business. Being a company director and / or company secretary carries legal responsibilities that the person needs to take on - and it's not unreasonable to pay someone for taking on those responsibilities. Now, before the answer to a question nobody asked comes along and voices his opinion again, I'm not saying that you can pay your wife £50k for being a director because there are legal responsibilities involved. But there is nothing wrong with paying a reasonable stipend to someone for taking on those legal responsibilities.

But can a company distribute shares as it pleases or are there restrictions and/or tax implications for the recipient?

I'm wondering about the benefit now the dividend tax is in effect, or gifting (selling?) shares in MyCo to my wife so that collectively we can take £10k dividends tax free. That £5k allowance per-person is worth £375/year on basic rate alone which is not to be sniffed at if it's easy and above board.

Did (m)any of you look into and actually end up doing this? What are the options and points to consider?

With my first company, I took professional advice and ended up gifting my wife 20% of the company. There were no tax implications of the gift between spouses.

With my later company, I took professional advice and guidance on how best to structure the company to give maximum flexibility for the future. To that end, I have one class A share and my wife has one class B share. Neither share is just a right to income, and comes will full voting rights. Ownership of the company is 50:50 between the two of us. But it means that we have flexibility about what level of dividend is paid on each class of share in the future - that could mean that both shares get £5k each and nothing more; it could mean that the class A gets £40k and the class B £1k; it could mean that the class B gets £40k and the class A gets nothing.

I'll just reiterate the words I took professional advice and guidance to try to avoid the inevitable posts.

[northernladuk]

To that end, I have one class A share and my wife has one class B share. Neither share is just a right to income, and comes will full voting rights. Ownership of the company is 50:50 between the two of us. But it means that we have flexibility about what level of dividend is paid on each class of share in the future - that could mean that both shares get £5k each and nothing more; it could mean that the class A gets £40k and the class B £1k; it could mean that the class B gets £40k and the class A gets nothing.

I'll just reiterate the words I took professional advice and guidance to try to avoid the inevitable posts.

I get you've got advice and I'm not one to challenge but for discussional purposes isnt the fact you can tailor the tax to n'th degree using this method the reason sthere is so much caution about it on the whole. It just feels too aggressive with no particular business reason.

That said you've done it exactly the way it is described in the guides so appears all above board.

It's funny to note that whilst searching most of the guides approached and explained it the same way...... Except for that lot that were banned, taxsmart. They have an article dedicated to advocating A, B and C class shares to maximise the tax loss and even uses the term alphabet shares. I'm not a tax specialist but it even looks crap to me.

[Lance]

I get you've got advice and I'm not one to challenge but for discussional purposes isnt the fact you can tailor the tax to n'th degree using this method exactly why it's not advised on the whole. It just feels too aggressive with no particular business reason.

aren't alphabet shares basically not covered by the Arctic Systems test case?
And therefore unproven.