Limited Company Subscribers

[NewMan]

I'm setting my Limited Company up with myself as sole Director and wife as Company Secretary. Should I make my wife a Subscriber?

[oraclesmith]

Do you mean a shareholder ?

[NewMan]

Yes, same thing

[oraclesmith]

OK, there are two answers ; Yes and No. Which one you need depends on a lot more information than you've posted so far.

Like :-

- Does you wife work? If so, how much does she earn? Is she going to earn fees for your company or do any (real) work for it ?

- How much are you going to earn from contracting ? Above upper earnings limit ?

- What kind of contracting are you doing? ie. would you generally be outside a deemed employment relationship - IR35 ?

- Are you planning on expanding the company beyond just you?

etc.

[malvolio]

Wait till Wednesday before deciding. The results of the Arctic case will seriously affect your decision, it would be foolish to ignore it at this stage.

[NewMan]

Wife is a stay at home mum currently not working but is looking to get back into the city contracting. This could happen quickly because she's being headhunted as I write this, but we don't have a surrogate mummy (nanny) even on radar at this point.

We'd both be in IT, different roles, but enough synergies to come under one company.

From preliminary review by accountant my initial contract is thought to be outside IR35.

Not planning to expand beyond the two of us but never say never and with IR35 substitution who knows.

I don't want to wait until Wednesday because I'm on holiday from Saturday and come back to start my contract within a week, so want to get the ball rolling.

I understand these things can be changed easily i.e. I can amend to make my wife a shareholder and/or director at such point that her way ahead becomes clearer and cost to do this is minimal so I'm thinking keep it as myself sole shareholder at this stage.

What say yeah?

[THEPUMA]

If you have to make a decision today, I would say do not have her as a shareholder. It is usually preferable to transfer shares to her than to allot shares initially anyway.

[oraclesmith]

Well there's a couple of factors that you might like to think about :-

- The S660A decision on Wednesday will have a bigger impact if your wife stays at home but is allocated a substantial share in the company. The legislation was meant to stop people using their (unemployed) partners tax allowance to maximise their family income.

- You could easily delay a decision until near to when you want to issue a dividend. In my opinion.

My wife earns a salary above UEL, so the S660A makes little difference to me because her half share in my company is taxed on me anyway. In hindsight it would have been cleaner to have a 99-1 share allocation.

My company's solicitor advised me to have some allocation for my wife in case something happens to me, so there is a surviving shareholder to take care of winding down the company etc.

[NewMan]

Thanks. I was setting the company up with a notional 100 shares, and issuing just 1 to me with the rest held over for now. I guess I can allocate the other 99 as I see fit at a later point.

Interesting about allocating 1 share to your wife in case something happens to you. Does her being Company Secretary not give her enough power in the event of your demise?

[oraclesmith]

Interesting about allocating 1 share to your wife in case something happens to you. Does her being Company Secretary not give her enough power in the event of your demise?

I'm not sure about the details but I believe without a surviving shareholder in control, the whole company would be taken over and disposed of as part of your estate.