I have been 100% shareholder for my limited company for the past 5 years and Director also. My wife has been secretary since the beginning when I formed the company. She is not a Director or an employee at the moment. I never paid her any salary for the past 5 years. She is working part time somewhere else for past 5 years but on a salary which does not incur much tax etc.
Also I have never taken more money out of my business account which will incur more tax for myself so have been within 40k-45K range. I have quite surplus cash in my bank account.
I want to change the shareholding structure so that it's 50:50 now. Don't want her to be the Director or employee of the company.
reading the forums I think there is no issue in giving her the ordinary shares as gift. below is my accountant response to this. Should I change the accountant or liquidate the company and than open new one with correct shareholding?
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Ideally at the point in which you formed your company the shares should have been transferred. At this time the company was in effect worth nothing, so 50% of the company could have been transferred to your wife and shares issued. Since then, you have generated income and the company has value, so if investigated by HMRC they may view this transfer of shares as income shifting.
HMRC may try and argue the shares that are being transferred are indeed a right to income because there is the expectation to receive the dividends if the underlying reasoning behind the transfer to ensure the main shareholder remains under the basic rate.
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Also I have never taken more money out of my business account which will incur more tax for myself so have been within 40k-45K range. I have quite surplus cash in my bank account.
I want to change the shareholding structure so that it's 50:50 now. Don't want her to be the Director or employee of the company.
reading the forums I think there is no issue in giving her the ordinary shares as gift. below is my accountant response to this. Should I change the accountant or liquidate the company and than open new one with correct shareholding?
-----------------------------
Ideally at the point in which you formed your company the shares should have been transferred. At this time the company was in effect worth nothing, so 50% of the company could have been transferred to your wife and shares issued. Since then, you have generated income and the company has value, so if investigated by HMRC they may view this transfer of shares as income shifting.
HMRC may try and argue the shares that are being transferred are indeed a right to income because there is the expectation to receive the dividends if the underlying reasoning behind the transfer to ensure the main shareholder remains under the basic rate.
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