Shoving some dividends into the missus

[Lance]

I can't understand just having one bank account - far too easy to break the £75k protection limit that way!

Neither do I but more for the 2% interest on current accounts up to £5k. It's not a lot but it's mine rather than the banks and you can get £1k per year of interest on savings tax free now.

[missinggreenfields]

Neither do I but more for the 2% interest on current accounts up to £5k. It's not a lot but it's mine rather than the banks and you can get £1k per year of interest on savings tax free now.

Open three accounts at RBS and they pay 3% on up to £5k in each. Three more for your spouse and there's £30k earning 3%, and you can pay the dividends into separate accounts.

Between my wife and I, we have three Santander 123 accounts because they were paying 3% on balances > £3k so £60k earning 3% for the year. Still probably worthwhile on larger balances even after the interest rate cuts.

[d000hg]

I agree with Fred, have 50:50 share distribution, normal shares wife is Company Secretary. Wld avoid Aphabetty Spaghetti shares personally - no such thing as a free lunch

A couple of people implied that 50:50 split is recommended/safer. On what grounds is that better than 75:25 or whatever you think makes sense?

I'm not sure this works very well when the other person has a regular permie job - surely you may well push them into the higher-tax bracket this way which would be counter-productive?

[Major Hassle]

A couple of people implied that 50:50 split is recommended/safer. On what grounds is that better than 75:25 or whatever you think makes sense?

I'm not sure this works very well when the other person has a regular permie job - surely you may well push them into the higher-tax bracket this way which would be counter-productive?

The percentage spilt from a share division perspective is not the issue, it's dependant upon your personal circumstances, my wife doesn't work so a 50:50 division makes sense.

More of an issue is the type of shares, ordinary shares across the board are best IMO rather than alphabet/preferential which in the same way as waivers begs HMRC avoidance questions.

[SuperLooper]

Because it looks you are allocating the divi to her to avoid the taxation on yourself but receiving the benefit when it hit's your joint account. Someone else will provide a posher explanation with big words shortly.

Is there any actual evidence to support this belief? Legislation, case law, precedent? Or is it just received wisdom?

I am frankly struggling to believe that HMRC would really care about spouses receiving dividend payments into their joint bank account.

[Major Hassle]

Is there any actual evidence to support this belief? Legislation, case law, precedent? Or is it just received wisdom?

I am frankly struggling to believe that HMRC would really care about spouses receiving dividend payments into their joint bank account.

Barring any case evidence it's a question of risk avoidance, how much hassle it it at the end of the day to set up a bank account?

[missinggreenfields]

More of an issue is the type of shares, ordinary shares across the board are best IMO rather than alphabet/preferential which in the same way as waivers begs HMRC avoidance questions.

It's not in the same way at all - dividend waivers have been dealt with in case law and have been shown to be something that you should be incredibly wary of using.

One of the key things in Arctic was that the shares had the same rights, and so that gives a good indication of how preference shares might be dealt with. AFAIK, no case has been brought or settled about preference shares, but I would be wary of preference shares because of the clear difference between preference shares and those that were used in Arctic.

Alphabet shares which match the criteria as those used in Arctic (not just a right to income, equal voting etc) are IMHO not in the same class as preference shares or dividend waivers. I see no difference in using alphabet shares than splitting the company 50:50 or 75:25 or even 99:1 with ordinary shares of the same class. I don't see it as risky and, as has been said before, it's something that InTouch have written about in the past as well.

[d000hg]

I see no difference in using alphabet shares than splitting the company 50:50 or 75:25 or even 99:1 with ordinary shares of the same class. I don't see it as risky and, as has been said before, it's something that InTouch have written about in the past as well.

I didn't know that - they're my accountants so I'll ask for a copy of that

[missinggreenfields]

I didn't know that - they're my accountants so I'll ask for a copy of that

It's on their blog here.

[FrontEnder]

Is there any actual evidence to support this belief? Legislation, case law, precedent? Or is it just received wisdom?

I am frankly struggling to believe that HMRC would really care about spouses receiving dividend payments into their joint bank account.

Me too.

I think one of the outcomes of the Arctic case was that it was acceptable to gift shares to a spouse. Part of the reasoning being that you're married, so you can share your assets and it's not the governments place to intervene in that.

So how could they claim that you are "receiving the benefit" by paying it into the joint account? That's completely at odds with the above.