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Income Shifting - help needed

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    Income Shifting - help needed

    My current situation

    Just started contracting 5 months ago

    Company was set up with 1 Share

    I am not married

    I am the director - currently no sec

    I am currently being advised to take only dividends for the remaining tax year - With is fine.

    THE QUESTION

    Can I create more shares in the company and split 60/40 with my mum or sister who earn below the higher rate band.

    So i can pay dividends to my self and mum/sister ?

    Advise and solutions needed on the above

    Thanks

    #2
    Originally posted by eltoro View Post
    So i can pay dividends to my self and mum/sister ?
    The answer, as with most things, is yes... you can.... whether or not it's a good idea is another question completely.

    I'd suggest reading this http://forums.contractoruk.com/accou...ot-spouse.html

    There will be plenty of other threads for your viewing pleasure if you search........

    Comment


      #3
      Originally posted by eltoro View Post
      THE QUESTION

      Can I create more shares in the company and split 60/40 with my mum or sister who earn below the higher rate band.
      Yes

      Originally posted by eltoro View Post
      So i can pay dividends to my self and mum/sister ?
      Yes, if they are shareholders

      Originally posted by eltoro View Post
      Advise and solutions needed on the above
      It's a really bad idea. Spouses are a special case - read up on the Arctic case to get the definitive answer. Having shareholders in the way that you provide would fall foul of the Ramsay principle - there is no legitimate reason for this, other than to reduce your personal tax due.

      If you go ahead, then any income that falls foul of this would be taxed as PAYE and need NI paying on it as well.

      Ask your accountant - if they come up with a different answer then get it in writing and stick it on here.
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      Comment


        #4
        My understanding is that you should not do this with your mother/sister etc, but you might find this useful reading? http://www.nixonwilliams.com/images/...20Shifting.pdf
        "The budget should be balanced, the Treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed lest Rome become bankrupt. People must again learn to work, instead of living on public assistance." Cicero

        Comment


          #5
          Originally posted by eltoro View Post
          Can I create more shares in the company and split 60/40 with my mum or sister who earn below the higher rate band. So i can pay dividends to my self and mum/sister ?
          Yes you can, but it will be THEIR MONEY not yours! If you are doing it to avoid tax and they will give the money straight back to you then that's going to be a bad idea and you will all get into trouble if (when) you get investigated.

          Also be aware that it will complicate their tax affairs and they will have to do a self assessment tax return too.

          All things considered, it's probably not a good idea unless you are genuinely running a family business.
          Free advice and opinions - refunds are available if you are not 100% satisfied.

          Comment


            #6
            Originally posted by Wanderer View Post
            Yes you can, but it will be THEIR MONEY not yours! If you are doing it to avoid tax and they will give the money straight back to you then that's going to be a bad idea and you will all get into trouble if (when) you get investigated.

            Also be aware that it will complicate their tax affairs and they will have to do a self assessment tax return too.

            All things considered, it's probably not a good idea unless you are genuinely running a family business.
            Very good point made by Wanderer that is often missed in these cases. The intial question of can you isn't the full situation. You could split it yes but can they give you it back. Absolutely not. If you want to give 40% of your wage away then go for it but in in 100% of cases that isn't what is intended.
            'CUK forum personality of 2011 - Winner - Yes really!!!!

            Comment


              #7
              Are you from Norfolk so your sister is also your wife? If not avoid, I am looking at alternative way's of getting money out of the company, currently thinking the company car route so all insurance, servicing and maintenance is taken care off as long as you pick the right car
              Originally posted by Stevie Wonder Boy
              I can't see any way to do it can you please advise?

              I want my account deleted and all of my information removed, I want to invoke my right to be forgotten.

              Comment


                #8
                Originally posted by SimonMac View Post
                Are you from Norfolk so your sister is also your wife? If not avoid,


                And if she is your advice would be???
                'CUK forum personality of 2011 - Winner - Yes really!!!!

                Comment


                  #9
                  Originally posted by northernladuk View Post


                  And if she is your advice would be???
                  If she is the HMRC will be the least of your problems, what are the medical bills for children with webbed feet and a having a tail these days like? Although when Global Warming comes and the lowlands like Norfolk are flooded having webbed feet will probably be an evolutionary advantage
                  Originally posted by Stevie Wonder Boy
                  I can't see any way to do it can you please advise?

                  I want my account deleted and all of my information removed, I want to invoke my right to be forgotten.

                  Comment


                    #10
                    Thanks for your advise guys

                    Maybe not a good idea!!!!!!! anyone got any other good way of extracting money with as little tax as possible!

                    Comment

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