Spouse dividend payment immediately after appointment

[coolguycp1]

I am looking to bring my wife as a director of my limited company. This will be done by gifting her shares.

Can the company pay her a large dividend (over £20K) immediately after joining (she is currently a basic rate tax payer)? I see this as a most tax efficient way of dividend payment from the company, but will this likely to raise any eyebrows with HMRC?

[eek]

I am looking to bring my wife as a director of my limited company. This will be done by gifting her shares.

Can the company pay her a large dividend (over £20K) immediately after joining (she is currently a basic rate tax payer)? I see this as a most tax efficient way of dividend payment from the company, but will this likely to raise any eyebrows with HMRC?

1) Ask your accountant - if you haven't got one look at the recommendations thread at the top of this forum phone a few and find one you like.
2) Directors and shareholders are entirely separate. You don't need to be a director to be a shareholder (until recently my wife wasn't a director).
3) Dividends need to be paid across all shares (unless you are being clever and using Alphabet shares that some accountants recommend and others hate). You can't just pay your wife a £20k dividend...
4) Ask your account - if you haven't got one look at the recommendations thread at the top of this forum phone and few and find one you like because based on those questions you really, really need one.

[northernladuk]

You should really do a bit more research than you have when you are talking about 20k lumps of money. Every article about this discusses the issues of gifting so it's not exactly lost. In the middle of a load of legalese.

With so little research if I was in your shoes I'd have a sit down with an accountant and explain the wife's situation in detail, go through the amounts and set up of your company and come to the best solution to suit your needs. We can give you the generic answer but it's dependant on the details of your situation. Please read a few articles and get a basic understanding of the issues first though.

[RonBW]

I am looking to bring my wife as a director of my limited company. This will be done by gifting her shares.

No it won't.

You appoint a director by having a board meeting, agreeing the appointment, and then filing form AP01 with Companies House.

You transfer shares between shareholders by completing a stock transfer form (J30) and including that with your annual filing.

You do not make someone a director by gifting them shares.

[TheCyclingProgrammer]

I am looking to bring my wife as a director of my limited company. This will be done by gifting her shares.

Does not compute. You make her a shareholder by giving her shares. You make her a director by filing the appropriate forms with Companies House. The latter is a piece of cake. The former is relatively easy but you should speak to your accountant to make sure you get the details right.

If you're making her say, a 50% shareholder, if you want to give her £20k in dividends you also need to give yourself £20k in dividends unless you're using a waiver (bad idea) or different classes of shares (grey area, potentially a bad idea).

[TheCyclingProgrammer]

The difference between being a shareholder and a director was explained to OP a year ago (I thought the username sounded familiar): http://forums.contractoruk.com/accou...ml#post2257255

It seems they still haven't figured it out.

[northernladuk]

The difference between being a shareholder and a director was explained to OP a year ago (I thought the username sounded familiar): http://forums.contractoruk.com/accou...ml#post2257255

It seems they still haven't figured it out.

Just makes you wonder what else they haven't but are yet to share with us on the forum.

[coolguycp1]

If you're making her say, a 50% shareholder, if you want to give her £20k in dividends you also need to give yourself £20k in dividends unless you're using a waiver (bad idea) or different classes of shares (grey area, potentially a bad idea).

I will not be issuing any waivers but pay myself similar dividend amount as well. No different class of shares as well.

The main query was, irrespective of being a shareholder or director (as I will need to do research on this one ), will the £20K immediate dividend payment bring any issues with HMRC?

[northernladuk]

I will not be issuing any waivers but pay myself similar dividend amount as well. No different class of shares as well.

The main query was, irrespective of being a shareholder or director (as I will need to do research on this one ), will the £20K immediate dividend payment bring any issues with HMRC?

Why not be smart and wait until a year end or something so don't have to worry about the immediate payment and doesn't look quite so suss?

[TheCyclingProgrammer]

Unless a query is opened for some other reason, the timing of the dividend is unlikely to be an issue as HMRC will not know the exact timing unless they query your wife's tax return and see the dividend vouchers.

All they will know from your accounts is that £x dividends were paid in the financial year and what tax year each of you received dividends in from your tax returns.