Income Splitting If Not Married

[Clare@InTouch]

But so much of what we do is artifical - We take a small salary and dividend on purpose to minimise our tax - We work through companies when we are really nothing more then disguised employees

Arranging your affairs so that you pay as little tax as possible is fine. Putting in artificial arrangements to work around the nature, scope and spirit of tax law is another thing altogether. Anything that is done for purely tax reasons, as opposed to commercial reasons, stands a chance of being challenged. There are often specific anti-avoidance provisions in the legislation for that very reason.

It would be like an employee getting their wages paid to their kids/parents/grandparents in order to split it across them and pay no tax at all. It's possible, but it's clearly an artificial structure set up for no reason but to avoid tax.

[northernladuk]

But so much of what we do is artifical - We take a small salary and dividend on purpose to minimise our tax - We work through companies when we are really nothing more then disguised employees

How someone can have such a poor grasp of the way they work, particularly when it involves running a company is totally beyond me. I hope HMRC come after people like this first before the others that are attempting to run their affairs properly.

[psychocandy]

I thought if your wife didn't have some demonstrable role in the company, then that was purely avoidance also?

Why? Ever own any barclays shares? Do you do any work for them?

Shareholding not relevant to work or role in company.

[psychocandy]

Correct - It is my parents who will start a company and the recruitment agent will sign a new contract with them and pay them. I cannot see a problem with this either which is why I have come to this board to see what I am missing

The plan is for them to take 35K dividends each and a 10K salary which they WILL NOT gift to me. The money will be used by them

If anyone investigates us we can say that I am a simple employee and my parents are the shareholders - Even though they do very little they are the 'brains' behind securing a contract and using me as an employee.

In fact you could go so far as saying that this is entrepreneurial as they are creating jobs (albeit at the outset just for s a family member) !!!

Yeh. You could do the parent thing but you've got to justify the 10K salary they get as well.

Are you really going to let your parents take £85K a year? And they're not giving it back to you?

Not being funny but HMRC aint dull, are they?

[psychocandy]

Why do people like the OP get pissed off when they cant do their dodgy deals?

Them's the rules, or at least that's the court case that allows income splitting between spouses. No good moaning that it should apply to other circumstances because it doesn't. Simple as.

Big difference like someone said between running a business properly and making things tax efficient, and then doing stupid things like paying your parents. £80K or whatever to parents and they wont be paying it back. Yeah right!

[DeludedAussie]

I'm a freelance for many reasons. Saving tax is a long way down the list.

So tell us the reasons - Quality of work and challenging environments yes?

Nothing at all to do with the fact you can make 2 * perm salary after tax?

If you want all the nice things that contracting supposedly gives you (apart from the tax break) why dont you become perm for 12 months and move around once a year? The answer : Becuase you, like me, want the money

[speling bee]

So tell us the reasons - Quality of work and challenging environments yes?

Nothing at all to do with the fact you can make 2 * perm salary after tax?

If you want all the nice things that contracting supposedly gives you (apart from the tax break) why dont you become perm for 12 months and move around once a year? The answer : Becuase you, like me, want the money

In seriousness, why don't you just use a vehicle like Breeze?

[psychocandy]

In seriousness, why don't you just use a vehicle like Breeze?

Cant be arsed to google it but is Breeze one of those dodgy offshore things?

If Aussie gets caught though they might deport him :-)

[northernladuk]

In seriousness, why don't you just do one?

FTFY

[malvolio]

So tell us the reasons - Quality of work and challenging environments yes?

Nothing at all to do with the fact you can make 2 * perm salary after tax?

If you want all the nice things that contracting supposedly gives you (apart from the tax break) why dont you become perm for 12 months and move around once a year? The answer : Becuase you, like me, want the money

Don't be so sure. I drfit between senior management and strategic service architecture roles depending on what's available. Even on my rates I would earn more - even after tax - as a permie, with starting salaries around £95k and a decent package and being paid 12 months a year plus holidays.

Doing it my way I get to have a month off to visit friends in New Zealand when I fancy it. I don't have to worry about career paths, promotions, politics and peer envy. I definitely don't have to deal with Human Remains and all that personnel rubbish. I work in many and varied clients, ranging from banks to governments to mobile phone companies to manufacturing. I have a constant refresh on my knowledge and get to meet some seriously interesting challenges. I can work 6 months a year and still pay the paper bill. I make my own decisions and am rarely, if ever, under anyone else's control (they only think they are).

It's called being content.