Changing wifes shareholding

[psychocandy]

Agreed but blatently using this vehicle as a tax avoidance scheme is not the way.

NLUK - I can sort of see what your saying and I know this is your standpoint for most tax matters. I agree - stick within the spirit of things and you wont get into trouble seems like one approach to take.

I cant help thinking that 'most' people wont do it like this though. In fact, AFAIK, all the big contractor accountant firms will recommend you pay yourself a smallish salary and then split the shares with your spouse if it works out better.

Yes, it is avoiding tax but it is legal after all. HMRC might not like it but should you care if it upsets them? Personally, I dont unless its likely to cause me hassle/money in the long term.

To be honest, I have changed my opinion slightly with regards to the tax situation with income shifting - IMHO you're right there - it is taking it a bit far to change the share split to suit every year or so. Asking for trouble I think.

[FunctionCall]

When I set up my company, it was just before the Arctic judgement, and at the time I was advised not to give my wife any shares in the company.

This has always irritated me a bit - she shares in the risks associated with the company, she does a lot of the financial stuff (without pay), and it would be nice if she could share in the ownership to some extent.

If I gave her some shares now, what would be the likely impact of that?

[THEPUMA]

When I set up my company, it was just before the Arctic judgement, and at the time I was advised not to give my wife any shares in the company.

This has always irritated me a bit - she shares in the risks associated with the company, she does a lot of the financial stuff (without pay), and it would be nice if she could share in the ownership to some extent.

If I gave her some shares now, what would be the likely impact of that?

The likely impact, assuming that you are a higher rate taxpayer and she is a basic rate taxpayer, is that you will save some tax. Possibly 25% of the amount of the dividend paid to her.

PUMA

[psychocandy]

When I set up my company, it was just before the Arctic judgement, and at the time I was advised not to give my wife any shares in the company.

This has always irritated me a bit - she shares in the risks associated with the company, she does a lot of the financial stuff (without pay), and it would be nice if she could share in the ownership to some extent.

If I gave her some shares now, what would be the likely impact of that?

Speak to your accountant but I reckon you're ok to split the shares.

[Bugbait]

Be interesting to see if there are any cases brought before courts to test this in the near future.

When I set up my company both the wife and I were contracting and she generated more revenue than me. The salaries, pension contributions and dividends have always been 50/50. After a few years she stopped working to look after our child (I offered to be a stay at home father since my work bores me but she declined). It's been a couple of years now and we still retain that structure. When she was working she generated hundreds of thousands in revenue for the company so I don't personally see the problem.

Of course HMRC don't care what I think though...

[Zoiderman]

My wife flits in and out of contracting, so maintains a 50% share. However, I was informed it would be immaterial were she nto to do that, that artic makes nonsense of it; anyone can have shares in a company and collect a dividend from it.

I also pay her minimum wage for back office work.

I can't see any legal issue with any of that.

We made her redundant from our first company, paying her £30k tax free. All legal.