Dividend payment

[Lumiere]

I thought it would also be worth quoting this:
" .. in over 50% of cases where clients have used dividend waivers, HMRC has queried them."

[rd409]

Share distribution is, as you said, for tax efficiency. However dividends were not paid to my spouse because I needed to achieve certain level of income for the purpose of some loan and hence paying higher rate tax too for last financial year. From next accounting period onwards i wouldn't require to achieve this level of income and hence dividend will be equally divided between both of us.



I haven't mentioned paying her any wage. she will only receive dividends as being share holder of the company.

Regards

How old is the company set up? Can you not have all the shares in your name till the date, you don't want your spouse to get dividends. Then gift her 50% shares, so you both can receive the same dividends. I am not sure, if this is technically possible, but more experienced accountants here can shed some light to how this may be done.

My 2p.

HTH.

[northernladuk]

Share distribution is, as you said, for tax efficiency. However dividends were not paid to my spouse because I needed to achieve certain level of income for the purpose of some loan and hence paying higher rate tax too for last financial year. From next accounting period onwards i wouldn't require to achieve this level of income and hence dividend will be equally divided between both of us.

As has been said before fudging your company and payments to suit yourself rather than run it properly will paing a very large bright target on it. Either set it up for tax efficiency or set it up to maximise your income. Trying to do both doesn't look good.

I haven't mentioned paying her any wage. she will only receive dividends as being share holder of the company.

Regards

I would beg to differ..

For this accounting period I haven't paid anything to my spouse as dividend/salary

I thought it would also be worth quoting this:
" .. in over 50% of cases where clients have used dividend waivers, HMRC has queried them."

Very interesting but could you also link the source please?

optimistic hat on for a sec, maybe his accountant has been completing the waiver paperwork all along and has copies on file....

I can understand that. I have a different hat when it comes to people asking questions about situations that are potentially a very big problem for them and they don't realise. Optimistic hats don't help if this is only the tip of the iceberg for him

[DivyeshS]

How old is the company set up? Can you not have all the shares in your name till the date, you don't want your spouse to get dividends. Then gift her 50% shares, so you both can receive the same dividends. I am not sure, if this is technically possible, but more experienced accountants here can shed some light to how this may be done.

My 2p.

HTH.

It's a one year old setup. I don't know if I can change the share structure retrospectively, so that I own 100% till the date. Since the setup of company it has been 50-50. If this is possible then it would become easy. I'll check with my accountant, meanwhile any views from experienced people here are highly appreciated.

I would beg to differ..

My mistake there if I confused you by typing 'dividend/salary'.

Regards

[Ravello]

It's a one year old setup. I don't know if I can change the share structure retrospectively, so that I own 100% till the date. Since the setup of company it has been 50-50. If this is possible then it would become easy. I'll check with my accountant, meanwhile any views from experienced people here are highly appreciated.

This is by far and away the easiest route... Allocation of shares in your company is an internal (to your co.) document and the transfer is as simple as filling in a form and having both parties sign it, the form is available on HMRC's site, but does not require submitting, merely a record held by your co.

Sadly though this is not something that can be completed retrospectively.

I would recommend talking to your accountant as to what records they hold in terms of share ownership and how they anticipated the split (or lack thereof) in dividend payments being OK.

[Wanderer]

I thought it would also be worth quoting this:
" .. in over 50% of cases where clients have used dividend waivers, HMRC has queried them."

Though in this case it's not a dividend waiver for the usual reason (main fee earner waiving their right to income, potentially creating a settlement) but a non fee earning shareholder waiving their dividend thus giving one shareholder all the money so it's probably going to be OK...