Ltd Company - Joint Share holders

[northernladuk]

Won't this have implications to the personal tax we pay though? i.e the person handing the cash over will probably end up paying personal tax when they break the £43,875 threshold? and the other one won't?

Am talking about cash in your pocket. Cash that hector can't see, cash that has already been taxed and been through the system. The hard green stuff that falls through your partners hands like water.

The lower paid person who is getting more through dividends than is fair gives the other person x pounds per week month to level it out outside the financial system

Was a bit of an offhand comment to be honest as it takes none of the complexities of tax burdens on etc but seems reasonable if you are happy with the rest of it.

Personally I would have seperated them so am being hypothetical here.

[biggles_1]

How do I value the shares for my partner to buy from me as I think the accountant means the whole "holdover relief" thing when they say CGT.

I would think the shares are worth the same as what I paid for them surely?

J.

[expat]

Could we keep "purchasing" shares from each other.... this would look dodgy wouldnt it??

Thanks for all the advise so far.

You're darn tootin' it would look dodgy. That's because it is dodgy. You are trying to twist the idea of being a shareholder in a company into the idea of using the company to channel your earnings to you without calling it income.

But the answer is staring you in the face: don't form a single company. If you want to keep your money separate, keep your companies separate. Why would you want to use a single company?

[Iain-Le-Roi]

In hindsight two companies definitely seem the way to go but as we are both set up as one company now and have been trading for a month I was looking for the best solution for the current situation and if we could make it work. I may yet just open another ltd company to make things simpler.

Am talking about cash in your pocket. Cash that hector can't see, cash that has already been taxed and been through the system. The hard green stuff that falls through your partners hands like water.

The lower paid person who is getting more through dividends than is fair gives the other person x pounds per week month to level it out outside the financial system

But won't this person (i.e the lower earner) still end up paying more personal tax as they will be taking more dividends out of the business to hand to the other partner and will prob break the threshold.. I suppose the 2nd person (high earner) could pay them that bit of tax back cash too?

[Microtots'r'us]

Different class

Why doesn't the lower rate earner just give some cash back to the higher rate person or take it upon themselves to pay a set of bills/outgoings to even it up? Leave the paperwork alone, keep Hector at bay and deal with it between yourselves?

If you have two people in same company habvuing different roles etc. and different rates of reward -why can't you have different share classes with different rights including rights to reward?
its called structuring

[Iain-Le-Roi]

If you have two people in same company habvuing different roles etc. and different rates of reward -why can't you have different share classes with different rights including rights to reward?
its called structuring

How would this work then?

Does anyone know any reasons why this set up wouldnt be compliant?

[blacjac]

There is nothing wrong with this setup, however as alluded to earlier in the thread if your rates change and you reclassify the shares every time you get new contracts then it would become a right royal PITA and HMRC may not like this in an audit.

[biggles_1]

I'm still not sure how I would value the shares were I to sell half to my unmarried partner.

Would the sale be OK at the price I paid? The bank account balance divided by the number of shares? Would it have to be to do with the turnover/profit? I'm thinking the price I paid should be good enough as the prospects and business situation hasn't changed since then.

After that I am seeing it as a business arrangement with an unrelated party as suggested by Malvolio. As we're not related I don;t see how this could be a problem as long as she can spend the money on what she wants to and I can't make her give it to me or spend it on anything specific.

J.

[THEPUMA]

A couple of points:-

Iain-Le-Roi I would go down the A and B share route. No need to specify the income rights of each dividend but you can simply pay disproportionate dividends at your discretion so this gives you maximum flexibility.

Biggles - No need to sell at market value. Just transfer at nil value and do a holdover relief claim.

Re the point made earlier about the income shifting exemption not applying to unmarried partners, this is correct but it is equally important to realise that dividends paid to an unmarried partner would only be liable to the settlements legislation if those dividends made their way back to the fee earner. So if the unmarried non-fee earning partner spent the money on shoes and handbags, that would be fine. Whereas if dividends are paid to spouse or minor child, they are automatically deemed to have made their way back to the fee earner.

[Iain-Le-Roi]

A couple of points:-

Iain-Le-Roi I would go down the A and B share route. No need to specify the income rights of each dividend but you can simply pay disproportionate dividends at your discretion so this gives you maximum flexibility.

And is the A and B share set up compliant in terms of current legislation. i.e if investigated by Hector does this stand up just as well as 50 50 share holders when in the IT contracting world?

Also how would moving from 50 50 share holders to A and B shares a month into the companies existance be percieved?

Thanks

Iain