Wife might contract, same company?

[proggy]

My other half is thinking of contracting also, is it better from a tax/costs point of view for her to use my company and we split the shares 50/50?

[Jessica@WhiteFieldTax]

It will prolly save you some accounting fees, but be prepared for your existing fee to go up, eg we charge £1,000 base and add on £240 for a second contractor. Other firms may vary.

Won't significantly change IR35 position by itself.

In most cases its tax neutral whether you split the shares in one co according to income, or have two separate companies.

The bottom line on this type of question is normally practicalities, for the most part domestic: are the two of you happy sharing a company and de facto pooling things, or would you prefer to each keep your own finances separate.

[northernladuk]

Again, why do we get the same quesiton on the same topic within days of each other? Sockies holiday or something?

To the OP.... scan the last day or two in both sections. This question has been asked already and is rumbling on... The key bit seems to be VAT thresholds it seems.

Also try the search, the shares/pay set up for the wife has been discussed many times.

[Maslins]

It will prolly save you some accounting fees, but be prepared for your existing fee to go up, eg we charge £1,000 base and add on £240 for a second contractor. Other firms may vary.

Won't significantly change IR35 position by itself.

In most cases its tax neutral whether you split the shares in one co according to income, or have two separate companies.

The bottom line on this type of question is normally practicalities, for the most part domestic: are the two of you happy sharing a company and de facto pooling things, or would you prefer to each keep your own finances separate.

If both parties are on similar day rates, then yes. If one earns far more than the other, personal tax bills will often be reduced by both taking 50% of the combined profits, rather than them each taking their own profits.

I'd suggest more often than not it makes sense. If you're married chances are your money is pooled anyway...so you wouldn't get the issues when people talking about setting a company jointly with a mate.

One potential downside is if two fee earners bumps your turnover up enough to force you to leave the FRS...but in most cases I'd expect the benefits of going through one co to outweigh the disadvantages.

[Jessica@WhiteFieldTax]

Yes, that's a fair point. I was assuming I suppose similar marginal rates for each party.

[matzie]

Won't significantly change IR35 position by itself.

True, but if you *really* wanted to 'pass' the business entity test, then *perhaps*, if your wife was neither a shareholder or a director of the company, but brought in 25% of the company's annual turnover, that would give you the 35 points available for the 'assistance' test - in theory. That's unlikely to hold water IMHO... but it would meet the letter of the test rules.

[northernladuk]

True, but if you *really* wanted to 'pass' the business entity test, then *perhaps*, if your wife was neither a shareholder or a director of the company, but brought in 25% of the company's annual turnover, that would give you the 35 points available for the 'assistance' test - in theory. That's unlikely to hold water IMHO... but it would meet the letter of the test rules.

Why bother meeting the letter of the rules if it isn't going to hold water? Seems a pointless exercise to me.

[Jessica@WhiteFieldTax]

True, but if you *really* wanted to 'pass' the business entity test, then *perhaps*, if your wife was neither a shareholder or a director of the company, but brought in 25% of the company's annual turnover, that would give you the 35 points available for the 'assistance' test - in theory. That's unlikely to hold water IMHO... but it would meet the letter of the test rules.

The Business Entity tests are guidance not statute, and I suspect HMRC would quickly discount spouse as a staff member. Certainly I would't feel safe relying on a relative being the hired hand.