Setting up Ltd Co with partner (non-spouse)

**cosmic** · 30 August 2019, 18:12

Originally posted by Dario View Post

Hello,

I would like to know if there are any issues with setting up a new Limited Company with a non-spouse (long term partner living together with children) with 50/50 shares.

My partner would have little involvement in the running of the Company (admin type duties) but would however receive 50% of the dividends.

I can see clearly online that this is fine for Spouses (based on Arctic Systems case), but it is much less clear for non-Spouses and especially for one's where they were 50% shareholders from the inception of the Company (opposed to gifting shares after the company formed and have value).

Appreciate if anyone that has any further information on the above could shed some light.

Thanks

You should post this not in general

. Saying that doing it with spouse is tax efficient but the risks are if you split then she owns 50% of the business. I know a contractor who split and was worried she would take all his money... the idiot spent it all on party, booze and girls, in the end she didn't and now tax man wants his money lol. I did say to him it's not his money but the companies money but didn't get it till HMRC came knocking on his door.

I would suggest talk to an accountant. Many questions to ask like does she work? If so would it take her to next tax bracket. Personally my wife does admin and no other source of income but she only has 40% of the shares and that was gifted after incorporation. This still leaves me in power over the company. When getting a mortage the provider wants to know if you have control and I'm sure I've been asked this same question elsewhere.

Best advice ask an accountant. Personal advice.... if she doesn't work and you trust her 100% (get on very well and both love each other) then gift 40% not 50% which is legitimate and still very tax efficient.

**TwoWolves** · 30 August 2019, 23:03

For god's sake marry the poor woman and stop making bastards.

**CryingSheep** · 31 August 2019, 00:15

Originally posted by TwoWolves View Post

For god's sake marry the poor woman and stop making bastards.

This is what Cosmic meant when mention you shouldn't post this on general...

**NotAllThere** · 31 August 2019, 06:42

Moved now.

**TheCyclingProgrammer** · 31 August 2019, 08:28

It is possible, I did it although we have since married. I only did a 75:25 split though.

Do a search though, this has been discussed to death on here and I’m so bored of long winded discussions on this subject.

The TLDR; version: it’s not caught by the settlements legislation by default like it is with married couples (where you need to make sure the spouse exemption applies) but it is still potentially possible to be caught by the rules in the right circumstances.

There’s also no real case law to provide definite guidance either way so most would say that adds an element of risk. On the other hand HMRC seem to have lost interest in pursuing settlements cases since they lost Arctic with only a couple of exceptional cases.

There’s also the other risk which is not tax related at all which is that you are giving up half of your business and it (and any dividends) will be hers to do with as she pleases. Bear that in mind if you think there’s any chance of you splitting up (mind you this is also an issue if you are married).

Get advice from your accountant on how to do this properly and spend some time reading old discussions if you really want to know the ins and outs - I have posted a lot about this in the past.

Setting up Ltd Co with partner (non-spouse)