Income Splitting with Spouse....

[Chugnut]

That's the one-

"used to discharge a joint liability".

That's nuts though. Doesn't it suggest that the non-income generating party would have to use 100% of each dividend received on themselves? They couldn't pay towards anything shared - mortgage, bills, weekly food shopping, car?

If it's a gift isn't it rather up to the recipient to dictate how it's spent?

[Fred Bloggs]

"used to discharge a joint liability".

That's nuts though. Doesn't it suggest that the non-income generating party would have to use 100% of each dividend received on themselves? They couldn't pay towards anything shared - mortgage, bills, weekly food shopping, car?

If it's a gift isn't it rather up to the recipient to dictate how it's spent?

One would hope so, but since when has common sense, justice and logic ever been part of taxation policy in the UK?

[prozak]

Well, my company will soon have a minority (25%) shareholder. The company will allot shares to her and to me to get the percentages right......... or should I allot all to me and gift to wife?

I will also be employing her for the tasks she already does for me. I've just got to come up with a sensible pay for her... somewhere between 0 and £110 per week (£139 next year I think)

One question. Am I being too sensible by going for 25% or should I make use of the whole 50% ?

[ASB]

How you should split will depend upon the amount you plan to distribute and your respective paye (and other) income. Your max tax efficent route is to ensure you both have earned (or at least taxable as) income of the amount of your respective tax codes. Then you both have dividend income (including from any other source) which is equal to at least 9/10 of the standard tax rate band.

In this way you will extract the maximum at the lower rates.

[prozak]

How you should split will depend upon the amount you plan to distribute and your respective paye (and other) income. Your max tax efficent route is to ensure you both have earned (or at least taxable as) income of the amount of your respective tax codes. Then you both have dividend income (including from any other source) which is equal to at least 9/10 of the standard tax rate band.

In this way you will extract the maximum at the lower rates.

ASB - yes undoubtedly to get the most efficient structure whilst my wife is only working for me I should split it 50/50.

My question about 25% was more in terms of whether I should split my company 50/50 considering HMRC's continuous attempts at disrupting this structure...

[ASB]

ASB - yes undoubtedly to get the most efficient structure whilst my wife is only working for me I should split it 50/50.

My question about 25% was more in terms of whether I should split my company 50/50 considering HMRC's continuous attempts at disrupting this structure...

How you split isn't going to make you any more or less visible. Though I wouldn't do more than 51/49. If they decide to do an enquiry then whether it is 75/25 or 50/50 isn't going to make any difference to the outcome or to the potential of them attacking the structure in my view.

[monkeyrhythm]

How you split isn't going to make you any more or less visible. Though I wouldn't do more than 51/49. If they decide to do an enquiry then whether it is 75/25 or 50/50 isn't going to make any difference to the outcome or to the potential of them attacking the structure in my view.

Why would you do 51/49 as opposed to 50/50? what does the additional (controlling interest) share mean in reality?

I'm just about to gift some (more) shares to my wife and I was going to leave us with a 50/50 split until I read your post...

[THEPUMA]

Why would you do 51/49 as opposed to 50/50? what does the additional (controlling interest) share mean in reality?

I'm just about to gift some (more) shares to my wife and I was going to leave us with a 50/50 split until I read your post...

Did you never watch Howard's Way?!

[monkeyrhythm]

Did you never watch Howard's Way?!

No; did I miss an essential piece of business education?

[Clare@InTouch]

No; did I miss an essential piece of business education?

Keeping an extra 1% gives you control over the company, which would come in exceptionally handy if you ever get divorced.