LTD Company spouse as shareholder query

[busgrw]

Eh? People normally call me a dick or a keyboard warrior or something. Feels very strange

Another though, although I don't personally like the idea of setting up the wife purely to use her tax breaks..... if it is the most efficient way of getting your money out of the business why do you intend to do it for a short term and then stop? If the only warning flag is you re-hashing the company structure why would you change it?

Simply because once I pay off the mortgage then I no longer need to push my company "to the limits of what is right and wrong". Would rather go back to the simple structure as it's easier for my simple brain to manage.

................dick

[northernladuk]

Simply because once I pay off the mortgage then I no longer need to push my company "to the limits of what is right and wrong". Would rather go back to the simple structure as it's easier for my simple brain to manage.

................dick

Phew... business as normal

Funny thing is you are pushing the company over that threshold by trying to keep in it... if that makes sense.

[busgrw]

Phew... business as normal

Funny thing is you are pushing the company over that threshold by trying to keep in it... if that makes sense.

Sorry Northern, needed my zzzzzz last night.

Not quite sure I understand what you mean on your previous. Am I actually over the limits of my allowances by doing what i'm doing?

B

[TheFaQQer]

Simply because once I pay off the mortgage then I no longer need to push my company "to the limits of what is right and wrong". Would rather go back to the simple structure as it's easier for my simple brain to manage.

There is nothing wrong with splitting the income with your wife - the Arctic case settled that. As long as it's done correctly, there is nothing wrong with it at all.

Rather than have her gift the shares back (which may look like an artificial tax avoidance measure), she could decline any future dividend due to her. That way, if you need to take more out in the future, you don't have to rejig the share holding again.

The only reason I don't income split with my wife is that if we did that she'd have to start paying back her student loan.

[Gemma at Qdos]

Please be aware of Section 660A.

It is a piece of legislation designed to target contractors making their spouse a shareholder to reduce the overall tax burden on the household.

There is an entire section on this website, so read up Section 660 - S660 / S660a Advice :: Husband and Wife Tax :: Income Shifting Legislation

[busgrw]

Rather than have her gift the shares back (which may look like an artificial tax avoidance measure), she could decline any future dividend due to her. That way, if you need to take more out in the future, you don't have to rejig the share holding again.

The only reason I don't income split with my wife is that if we did that she'd have to start paying back her student loan.

Cheers for the advise FaQQer. Especially on the student loan thing as I need to take that into consideration. My wife already pays into her student loan but if she takes dividends then I assume that'll have a knock on effect to her monthly payments. WIll look into it.

Cheers.

[busgrw]

Please be aware of Section 660A.

It is a piece of legislation designed to target contractors making their spouse a shareholder to reduce the overall tax burden on the household.

There is an entire section on this website, so read up Section 660 - S660 / S660a Advice :: Husband and Wife Tax :: Income Shifting Legislation

Will have a read Gemma. Cheers.

[Wanderer]

I was looking at was to bring my wife in as a shareholder (20%) so as to pay her dividends until 2015 date. After that I was going to remove her as a shareholder.

I wouldn't go making a habit of it because you might get some negative attention from HMRC but as far as I can see it's legal enough.

My question is, would removing her have any impact on the money currently in the business account or can she in effect step down as a shareholder without 'cashing in' her shares as I don't want to be transferring 20% of the Business profits across and incurring income tax on it. How would this work?

She would be unconditionally gifted ordinary (not preference) shares. Note that this would give her a right to vote at shareholder meetings (a formality in your case but an important point under law). When you are done, she would gift the shares back to you. As far as I can see, there doesn't have to be a payment for the shares either way as it's an "unconditional gift between spouses"

The other question is, how much does your wife earn at the moment?

If she is a non earner then you should probably do a permanent 50/50 share split and consider getting her to work for your business so you can pay her a salary.

If she has other income then get your accountant to do the calculations for you and determine what the optimal share split would be. Be careful not to put her into the higher rate tax bracket or you will complicate her tax affairs and she may find her tax code changes which may lower her "take home" pay from her job which she will most likely find confusing and upsetting even though your net income as a couple would be higher.

[busgrw]

The other question is, how much does your wife earn at the moment?

If she is a non earner then you should probably do a permanent 50/50 share split and consider getting her to work for your business so you can pay her a salary.

If she has other income then get your accountant to do the calculations for you and determine what the optimal share split would be. Be careful not to put her into the higher rate tax bracket or you will complicate her tax affairs and she may find her tax code changes which may lower her "take home" pay from her job which she will most likely find confusing and upsetting even though your net income as a couple would be higher.

Hey Wanderer, thanks for the info. All points me in the right direction and confirms that my approach is doable.

In terms of her earnings, she currently earns £32k per year. From what I understand this means she can come in on a 80/20 share split without incuring any additional tax by pushing her over the HRT threshold.

Cheers.

[busgrw]

One more question guys if you don't mind. Is it ok for your mother to be the other shareholder or can it only be your wife?

Cheers.