Originally posted by WordIsBond
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I'm a bit bemused InTouch are going along with this without a word or warning or explanation as well. The other accountants appear to not want to touch this idea as they advised the OP speak to his accountant but NW piled straight in with the aggressive setup as if it was standard practice.
If I were the OP, I would not pay a salary to spouse, since that would put her into higher rate tax. I would want to structure shares such that my spouse could receive £5K dividends tax free, and that I could approximately maximise my income under the higher rate band.
I would pay myself £8K salary. That would leave £37K available for dividends (presumably that £37K will increase towards £40K or higher in the next few years) without going into the higher rate band. So the target dividends would be £5K for spouse and £37K for myself. I would use an 8-1 split, 8 shares for myself, 1 share for spouse.
This year, I would pay £4.6K per share in dividends -- £36.8K to me, £4.6K to spouse. As the threshold increases in future years, I would increase the per share dividend, keeping myself within the basic rate band. Once the per share dividend reached £5K, if I still had room within the higher rate band, I would increase the salary instead (which would incur NI liabilities but save on Corporation Tax, so almost a wash).
If your spouse ever quits her job, you could restructure, everything changes. You probably don't want to change your share structure frequently (that also could look suspicious to HMRC), but it certainly makes sense to review it every 4-5 years.
I would pay myself £8K salary. That would leave £37K available for dividends (presumably that £37K will increase towards £40K or higher in the next few years) without going into the higher rate band. So the target dividends would be £5K for spouse and £37K for myself. I would use an 8-1 split, 8 shares for myself, 1 share for spouse.
This year, I would pay £4.6K per share in dividends -- £36.8K to me, £4.6K to spouse. As the threshold increases in future years, I would increase the per share dividend, keeping myself within the basic rate band. Once the per share dividend reached £5K, if I still had room within the higher rate band, I would increase the salary instead (which would incur NI liabilities but save on Corporation Tax, so almost a wash).
If your spouse ever quits her job, you could restructure, everything changes. You probably don't want to change your share structure frequently (that also could look suspicious to HMRC), but it certainly makes sense to review it every 4-5 years.
Edit: Just noticed this is my 1000th post. Incredible. I need to get a life.
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