Paying Wife Redundancy

[northernladuk]

Why doesn't the OP and the other guy just sack their wives who can then just sue the company for everything it's got, no 30k cap. If you think you can claim redundancy you've got to believe she can do this as well surely?

[northernladuk]

I remember reading somewhere that if your wife is employed (contract, role, paye), you can make her role redundant.

Very very few contractors have their wife as an employee. Many just don't understand that being a director and with shares, even paying her, does not make her an employee. And before you ask, good luck drawing a contract of employment up a few months before making her redundant and paay her £30k....

For instance she could be part of customer relations and advertising team i.e. going places and trying to get you business.
Or she could be in the data processing and verification team.

But you are making crap up. No wifes do this for their company. They are a tax mule nothing more. Be reaslistic at least.

Also she can receive up to £30 000 tax free.

Riiiight. You way your wife 8k a year and then just happen to give her the full wack allowed to hit (another) tax limit... That's really gonna fly.

Obviously check with your accountant.

Maybe you should have as well. No decent accountant is going to go along with this. It's just a sham. If something is done that isn't a business decision and is done purely for the tax element then it's aggressive tax evasion.

Also I dont think £30k is a good idea, but something around statutory+little extra should be fine.

Redundancy is a redundancy no matter if it is a big corp or 2 souls corp, all the same in the eyes of the law.

If done properly with good business reason...which is highly unlikely in a two company set up. You may be forgetting that it might be law but if doing it is to gain an unfair tax advantage then it falls foul of other laws. They are the ones you want to be avoiding.

If you want to do it then go speak to your accountant. If you get it past them then fill your boots. As you can see, apart from captain bone head you aren't convincing anyone here.

Try searching the forums, you'll find a raft of threads exactly like this that all come to exactly the same conclusion.

[NowPermOutsideUK]

That is not strictly true, particularly in this case. What you've got yourself wrapped up in are two completely different situations. Big companies make people redundant as part of business, cost saving, getting rid of individuals etc... They do it for a pretty good business reason. Contractors ask about it because it's a tax dodge. Trainging is the same. When we tell a techie they can't expense their MBA through the other company they often whine about how 'big companies do it'. Same thing.. they do it for a business reason, not to try and reduce their tax bill which is why the contractor wants it through the company.
You cannot go round comparing large companies with a tax dodging two person company. Well you can if you want to look a bit of a pillock I guess.

Get that through your head and then what is right and wrong very much comes in to play. Big companies can make people reducnant and pay them off yes but no, a small two person company trying to extract the company cash can't.

If you are going to get excited about dodge tax avoidance techniques you've got to apply much better analysis than whining about a big company can do it. You've got to look at it very objectively and you've also got to be prepared to walk away. Arguing with us doesn't change anything.

Also ask yourself this... If it can be done, why isn't it in every guide from newbie upwards? Getting your wife in the business is, but redundancy is not.. does that not tell you something.....

Thank you nluk. This is genuinely helpful

I do hear your arguments but maybe one of the reasons that it’s not in the guides is because people were never focused on getting cash out the ltd as they are now when dividend taxes have gone up and people have more time at home to think through ideas that have been always been cooking in their minds

I think a lot of people are now also starting to think about winding down their ltd balances and what options are available to them

One final thing if I may with your permission. When I first heard of contracting many years ago I could not believe it was legal. I could not believe you could deliberately pay yourself 9k a year whilst billing many multiples of that. I learnt from asking and talking to colleagues and jumping on the train. My point is that just because it’s not been done before does not mean it has no credibility and legislation does change. I just sometime hope and maybe wish that some of these ideas might be genuine and if I can persuade other contractors who have tried that role that there is a good basis then I can maybe investigate it offline with more specialist research.

Thank you again

[northernladuk]

I do hear your arguments but maybe one of the reasons that it’s not in the guides is because people were never focused on getting cash out the ltd as they are now when dividend taxes have gone up and people have more time at home to think through ideas that have been always been cooking in their minds

Contracting has been around 30 plus years. There are a lot of very clever people involved. If people can come up with schemes to get paid from bonuses and all sort of other convulted methods then getting redundancy out of a company should have been a breeze.. and guess what.. no one has.

It's not in the guides as it's a bad idea that doesn't work.

I think a lot of people are now also starting to think about winding down their ltd balances and what options are available to them

People have been doing this for decades and with a lot bigger sums of money than we make nowadays... again... still no redundancy option...

One final thing if I may with your permission. When I first heard of contracting many years ago I could not believe it was legal. I could not believe you could deliberately pay yourself 9k a year whilst billing many multiples of that. I learnt from asking and talking to colleagues and jumping on the train. My point is that just because it’s not been done before does not mean it has no credibility and legislation does change. I just sometime hope and maybe wish that some of these ideas might be genuine and if I can persuade other contractors who have tried that role that there is a good basis then I can maybe investigate it offline with more specialist research.
Thank you again

That is because you are thinking and acting like a permatractor. Sadly many many people do. In a perfect world IR35 would have worked and sorted out them that do and them that don't. If you ran a business it would make much more sense.

[NotAllThere]

If you want to see what happens to people who use loopholes and technicalities to gain tax advantage, have a look here: https://www.contractoruk.com/forums/...eme-enquiries/

[anim]

.....bla-bla

But you are making crap up.

You started first.....
I understand you are risk averse, but dont try to shoot down just about any idea/setup which you will not do, even though they are perfectly allowed.

Anyway to be on topic. I dont advocate just any 2 people LTD to give redundancy. The ones that have the proper setup (from start) can, if they want.

Is this allowed - yes.
Can it attract HMRC investigation - sure.
Will it - one one knows.
Will HMRC win - no one knows.

Do you know? Can you point us to tribunal/court ruling in that respect?

[WTFH]

Is this allowed - yes.

What do you mean by "allowed"?
Do you mean "legal"?
Do you mean "Not considered fraud"?
Do you mean "recommended by professional accountants and tax advisors"?

Or is it "allowed" in the same way that driving at 100mph on the M25 is "allowed", because your car can do it?

[anim]

What do you mean by "allowed"?
Do you mean "legal"?
Do you mean "Not considered fraud"?
Do you mean "recommended by professional accountants and tax advisors"?

Or is it "allowed" in the same way that driving at 100mph on the M25 is "allowed", because your car can do it?

What do you mean?

It is not legal?
Is is considered fraud?
It is not recommended by professional accountants and tax advisers?

[WTFH]

What do you mean?

It is not legal?
Is is considered fraud?
It is not recommended by professional accountants and tax advisers?

You're the one suggesting it and claiming it is allowed. I'm asking you for what you mean by "allowed".
Is it too difficult for you to provide a straight answer?

[anim]

You're the one suggesting it and claiming it is allowed. I'm asking you for what you mean by "allowed".
Is it too difficult for you to provide a straight answer?

My straight answer is it is allowed.
If you know otherwise you are welcome to prove me wrong.

Here is a question for you. If you ask you accountant should you do income splitting with your spouse and he/she say 'no, dont do it' will they be right?

Now you will say there is a legal precedent that it is allowed.

Is there a legal precedent that redundancy is not allowed in 2-men LTD?