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Official Summer 2015 Budget Thread

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    Originally posted by DaveB View Post
    Would you pay someone £11,000 a year for 2-3 hours of admin work a month?
    No, but I said a "few grand", not £11k.

    I'm pretty sure my admin is more than 2-3 hours but even if it was, at my daily rate 3 hours a month pro-rata is approx. £225, or £2.7k a year which, co-incidentally is only slightly higher than the salary I pay my wife.

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      ....

      Originally posted by DaveB View Post
      No, you are missing the point. It has nothing to do with trust.

      HMRC will look at what your spouce receives as remuneration from the company other than dividends and expect it to reflect the value provided to the company. If they do not believe that it is an accurate relfection of the work actually being done or the value genertated then they will either treat it as your income or as evaision.

      BIM47106 - Specific deductions: staffing costs: remuneration payments to friends and relatives: wholly and exclusively
      All of the 'will's above need to be replaced with 'can'.

      We have had this argument again and again here. It is not for HMRC to determine what is appropriate. There are many circumstances where p/t directors of large companies work on huge retainers for a few days work pa. See T Blair and G Brown.

      Comment


        After Arctic Systems, no one cares much what HMRC thinks on income splitting re: a spouse. They lost. It's different with a partner, but spouses are on pretty solid footing.

        In any event, some compensation for the liability associated with being a director is "justified on ordinary commercial grounds." So HMRC's view here is not inconsistent with what TCP and I have said.

        What is justified on ordinary commercial grounds? Well, here's a study on fees for non-executive directors. Obviously, the fee would be smaller for smaller companies.

        Being a director is worth something, and nothing in the link you gave said it isn't. The problem is if you pay a salary significantly more than a director is worth, but it is easy with studies like that to justify £10K, especially if you include bookkeeping, etc.

        Comment


          Originally posted by TheCyclingProgrammer View Post
          No, but I said a "few grand", not £11k.

          I'm pretty sure my admin is more than 2-3 hours but even if it was, at my daily rate 3 hours a month pro-rata is approx. £225, or £2.7k a year which, co-incidentally is only slightly higher than the salary I pay my wife.
          Which is probably acceptable, but WordIsBond is advicating paying the full basic rate allowane of £11,000 next year and claiming it against CT and NI allowances. Thats taking the piss IMO (and probably HMRC's too).
          "Being nice costs nothing and sometimes gets you extra bacon" - Pondlife.

          Comment


            Originally posted by DaveB View Post
            No, missing the point. You can do it, but there is no automatic assumption that by being one, you have to be the other.
            And where, exactly, did I say that you HAVE to be both? What I said is that if you are going to make your spouse a shareholder, it would be foolish not to make them a company officer too.

            You're quite right though, if you want to pay a bigger CGT bill somewhere down the line, by all means don't bother.

            Comment


              Originally posted by DaveB View Post
              Thats taking the piss IMO (and probably HMRC's too).
              Maybe but I don't think its very clear cut and is ultimately down to what you (and maybe your accountant) think is justifiable should push come to shove and HMRC ever ask.

              I erred on the side of caution when deciding what to pay my wife in terms of salary but I don't think £10k or so for assuming the responsibilities of being a director (my wife isn't actually a director, just co. sec) is entirely unreasonable either - as has been pointed out many non-executive director's get paid much more than that. Have you seen what the members of the TFL board get paid for attending a few meetings each year, plus expenses?

              Comment


                Seeing as we're all doing back of a fag packet calculations, then seeing as it looks like for most average contractors the extra tax hit is going to be about £2k-ish to your company's bottom line (as it will cost you more to maintain the same take-home as currently), then it shouldn't need a huge increase in rate to recover this. If you work 40 weeks a year, 200 days, then that's only a £10/day increase.

                Comment


                  Originally posted by TheCyclingProgrammer View Post
                  Maybe but I don't think its very clear cut and is ultimately down to what you (and maybe your accountant) think is justifiable should push come to shove and HMRC ever ask.

                  I erred on the side of caution when deciding what to pay my wife in terms of salary but I don't think £10k or so for assuming the responsibilities of being a director (my wife isn't actually a director, just co. sec) is entirely unreasonable either - as has been pointed out many non-executive director's get paid much more than that. Have you seen what the members of the TFL board get paid for attending a few meetings each year, plus expenses?
                  Yes, but they are in effect at arms length, they are *not* relatives of the main director. That's the distinction.
                  "Being nice costs nothing and sometimes gets you extra bacon" - Pondlife.

                  Comment


                    Originally posted by TheCyclingProgrammer View Post
                    Have you seen what the members of the TFL board get paid for attending a few meetings each year, plus expenses?
                    But TFL has more than one employee and director.

                    Comment


                      Originally posted by DaveB View Post
                      Thats taking the piss IMO (and probably HMRC's too).
                      Did you look at the PWC study?

                      Of course, my revenue is around £200K per annum. If yours is £50K, then a £10K salary for a non-exec director might be harder to justify.

                      I can easily justify £3K for bookkeeping, etc, and £7K for a non-exec director. If your spouse isn't doing your bookkeeping, it might get harder.

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