Is this a good set up?

**northernladuk** · 2 March 2010, 23:07

What is your thinking about your wife being an equal shareholder? She already pays top rate tax so you can't use her tax situation to benefit you? I thought incoming splitting was only an advantage if she was a non-working partner?

**djhns** · 2 March 2010, 23:17

Oh, i forgot that in this case, this means she will also receive the same dividends as my self since she's an equal shareholder - OK.

She will receive the £10K capital gain at the end when i wind the company up - most likely in 12 months time.

I was thinking because she doens't have to do self assessment returns, she won't need to apply or record the dividends received in sa return and hence won't have to pay additonal tax on that anyway.

But if i was the only shareholder, then i would have to record all the dividends to myself and pay more tax on it.

is this not correct?

Or by paying her dividends, this will trigger HMRC to send her a letter to prepare annual sa?

**northernladuk** · 2 March 2010, 23:43

I was thinking because she doens't have to do self assessment returns, she won't need to apply or record the dividends received in sa return and hence won't have to pay additonal tax on that anyway.

I am pretty sure it is illegal to knowingly not declare extra income. Just because they don't ask you means you can just go round hiding it as you see fit.

I don't know the complete ins and outs as my accountant does all mine but I havn't seen much income splitting when the other half works full time so am wondering if there is no benefit in doing such. I havn't heard of the capital gains trick before either so dunno about that. Doesn't make sense but then i don't know.

**Gonzo** · 2 March 2010, 23:59

Originally posted by northernladuk View Post

I am pretty sure it is illegal to knowingly not declare extra income. Just because they don't ask you means you can just go round hiding it as you see fit.

I don't know the complete ins and outs as my accountant does all mine but I havn't seen much income splitting when the other half works full time so am wondering if there is no benefit in doing such. I havn't heard of the capital gains trick before either so dunno about that. Doesn't make sense but then i don't know.

Relax. This has to be a troll.

See this thread http://forums.contractoruk.com/accou...neglected.html.

It is not credible that one person could be so completely wrong about every aspect of contractor taxation.

**northernladuk** · 3 March 2010, 00:22

Originally posted by Gonzo View Post

It is not credible that one person could be so completely wrong about every aspect of contractor taxation.

Don't bet on it! You haven't seen me post any questions on taxation and accounts yet.

**northernladuk** · 3 March 2010, 00:32

Originally posted by Gonzo View Post

Relax. This has to be a troll.

See this thread http://forums.contractoruk.com/accou...neglected.html.

It is not credible that one person could be so completely wrong about every aspect of contractor taxation.

ok I just read that thread end to end and i take my previous comment back. even my pitiful leve of knowledge about tax and accountacy can't match that. I even feel a liitle bit clever next to that

**TheFaQQer** · 3 March 2010, 09:38

Originally posted by djhns View Post

i'm about to set up a limited company as i've just landed a 6 months contract and would like to work out the most tax effective structure

Provided it falls outside IR35, can i structure the company so i am the director and have my wife and myself equal shareholders.

Can i pay myself minimum salary of about £6000 pa odd (min before tax/ni kicks in) and the rest in dividends?

But retain at the end of the year £20k of which if split half half would be the £10k odd individual capital gains tax free threshold allowance per year.

The thing is, i have to do annual tax self assesments but my wife doens't. She has a perm job and is in the highest tax bracket as well. Will this be a benefit in doing so?

I am planning on doing my own booking (which i think is pretty easy), VAT and CT return.

Can anyone pick out or is aware of anything that i may be unpleasantly surprised by down the track? Or any helpful hints, additions or links regarding the above.

many thanks.

What happened to the company that you ran last year?

**djhns** · 3 March 2010, 11:46

@The Faqqer

I managed to submit the accounts as they were (contracts outside IR35 based on 2 reviews) and then wind the company down.. so hopefully all fine.

Now regarding the first two member comments:

I am being serious and seeking help and advice here.

Sometimes i wonder if people have too much time on their hands on this forum and instead of providing helpful advice, just critisise and pass stupid judgements. If you cannot contribute anything constructive, then it's better not to comment at all. Perhaps get a life?

**malvolio** · 3 March 2010, 12:02

And sometimes we get questions from people who (a) haven't bothered to research the subject properly and expect us to answer any and all questions, (b) have no idea of the rules but have decided to work without professional guidance on a key element of their job and (c) get pissy when others refuse to take them seriously.

If' you've run a company before, you should know the answers to the questions you asked already. Since you don't, either you were very lucky not to get done last time around or are winding us up.

On the off chance you are genuine, standard advice applies. Read the guides (properly!) and get an accountant. Everything you asked has been explained, properly and in detail, within the last six months.

Is this a good set up?