Income Shifting after a few years

[wantacontract]

my accountant says go for 80-20, an uneven split.....unless she's going to be contributing 50% effort towards the company....

[northernladuk]

Let's not pretend that most people on here don't do this for any other reason other than to save tax or that most accountants (including many of those who post on here) won't recommend this as an efficient means of doing so. A company doesn't need to have a "business reason" to give shares to somebody.

Unless you're implying that HMRC could challenge these arrangements under a general anti-avoidance rule, in which case why did they even bother with the "Family Business Tax"?

I certainly don't and I am sure many others don't. It does have to have a business reason to be providing company funded laptops and phones. The husbands and wives shares thing is obviously a point of discussion but in a majority of cases the wife doesn't work. Pretending your wife is an agent, giving business kit and using the last couple of K of her tax threshold is just stupid. What is the savings? Hardly enough to push the boundaries so far.

Maybe people do use the loop holes here and there but Kevpuk's post just goes too far.

[Wanderer]

my accountant says go for 80-20, an uneven split.....unless she's going to be contributing 50% effort towards the company....

Your accountant is wrong, in my opinion. If you are going to do the share split then do it 50/50, that's what Arctic did and they won their case. The wife also took a salary and that wasn't questioned either...

[TheCyclingProgrammer]

Your accountant is wrong, in my opinion. If you are going to do the share split then do it 50/50, that's what Arctic did and they won their case. The wife also took a salary and that wasn't questioned either...

To be fair, any split (up to 50/50 at least) is probably fine. A lower share might make more sense, tax wise. I don't understand the argument that the shareholding should reflect the contribution to the business either, but some accountants clearly err on the side of caution here.

[Iter]

Occurred to me today which will check with accountant... as sole director in Ltd company are dividends ok to be paid into a Joint account (this just happens to be my personal account with wife for bills etc).

The dividend payments are transferred from Business account. I also transfer my PAYE etc (but they are all separate not lumped!)

I can understand the reasoning for possibly paying a wifes didvidends into separate account if she was a joint shareholder but that isn't the case.

Effectively there is no shifting or reduction in tax anyway as I'm still liable for the full dividend tax being the sole director.

[pr1]

Occurred to me today which will check with accountant... as sole director in Ltd company are dividends ok to be paid into a Joint account (this just happens to be my personal account with wife for bills etc).

The dividend payments are transferred from Business account. I also transfer my PAYE etc (but they are all separate not lumped!)

I can understand the reasoning for possibly paying a wifes didvidends into separate account if she was a joint shareholder but that isn't the case.

Effectively there is no shifting or reduction in tax anyway as I'm still liable for the full dividend tax being the sole director.

Do you mean sole shareholder?
if so, that's fine

[Iter]

Do you mean sole shareholder?
if so, that's fine

Sorry Yes, Sole Director and 100 % Shareholder

[missinggreenfields]

Sorry Yes, Sole Director and 100 % Shareholder

If you only have that account, then it would be unreasonable to expect you to require another one just for dividends, so I would have no issue with paying dividends into a joint account.

I know it's not your situation, but if I only had a joint account and my wife was a shareholder, I would have no issue with paying dividends for both shareholders into the one account. But I would do it as two different transactions.

[WordIsBond]

Only thing absolutely necessary is to make sure the paperwork is clear. If your spouse is a shareholder, it is probably safer, but not required, to pay her dividends and yours into different accounts. If you are the only shareholder, do whatever, but make sure to do the paperwork so they can't argue that your dividends were salary and should be taxed accordingly. And there is something to be said for emailing dividend vouchers to your accountant at the time so no one can argue they were done after the fact.