Official Summer 2015 Budget Thread

[DaveB]

That's a matter of opinion. Some would argue that the legal responsibilities involved with being a director carry some value worth remunerating.

HMRC wouldn't

BIM47106 - Specific deductions: staffing costs: remuneration payments to friends and relatives: wholly and exclusively

[SpontaneousOrder]

No one will pay 90k for run of the mill Java dev.

First one I found on first page of results, but this is (at 80k) a box-standard (but experienced) java dev.

Java Developer MongoDB - Front Office - London - July-07-2015 (EN8HG)

I'm sure I could find some 90k-ers too.


This is fairly common - just a normal Java developer spec.



The 700 per day guys you linked to earlier are paying 110k, and are obviously far less common (high end, like to 700 per day guys).

[WordIsBond]

That's a matter of opinion. Some would argue that the legal responsibilities involved with being a director carry some value worth remunerating.

Precisely. Non-exec directors for many companies are paid a hefty sum even though they have no employment tasks.

No, there is no connection between being a shareholder in a company and holding a position with that company. The two are completely seperate.

Which misses the point entirely. If you trust your spouse enough to make her a shareholder, then you trust her enough to give her an office in the company and pay her a salary up to the NI threshold. And that is the tax efficient way to go, unless she is already a higher-rate taxpayer.

[DaveB]

Precisely. Non-exec directors for many companies are paid a hefty sum even though they have no employment tasks.

Which misses the point entirely. If you trust your spouse enough to make her a shareholder, then you trust her enough to give her an office in the company and pay her a salary up to the NI threshold. And that is the tax efficient way to go, unless she is already a higher-rate taxpayer.

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

Careful consideration of the facts will be required in worthwhile cases to establish whether the level of the remuneration paid to a friend or relative of the proprietor is commercial and commensurate with the duties undertaken.

[SimonMac]

Statement
Top of page 45, 1.187:


So it appears it comes on top of the personal allowance, and a spouse with no salary or other income is likely to be able to receive £16K of dividends before the tax kicks in.

I wouldn't be so sure, it's gonna be a use it or lose it thing, not trasnferable between dividends and other incomes

[TheCyclingProgrammer]

HMRC wouldn't

BIM47106 - Specific deductions: staffing costs: remuneration payments to friends and relatives: wholly and exclusively

All that page says is what you already said before - that the salary should be wholly and exclusively for business purposes and this can be judged based on whether it would be similar to any salary made at arms length to an unconnected person when judging whether or not it is excessive. Its hard to imagine any scenario where a few grand a year for being a director/co.sec and doing some admin is considered "excessive" by any normal standards. Would I pay an unconnected person a few grand a year to do the same thing? Yes. Would most people? I think, if you didn't happen to have a spouse and somebody offered to do a load of your admin for you for a couple of grand a year salary you'd bite their hand off.

[TheCyclingProgrammer]

No, there is no connection between being a shareholder in a company and holding a position with that company. The two are completely seperate.

Actually there is a connection - albeit an indirect one. If you make your spouse a shareholder without also making them a company officer you have been very poorly advised - they won't be eligible to claim ER on their proportion of any capital distribution if you eventually liquidate the company. If they are a company officer, and have been for at least 12 months prior to liquidating, then they will be. Depending on their share and the amount of profits to be distributed that could be the difference in thousands of pounds of tax.

[DaveB]

All that page says is what you already said before - that the salary should be wholly and exclusively for business purposes and this can be judged based on whether it would be similar to any salary made at arms length to an unconnected person when judging whether or not it is excessive. Its hard to imagine any scenario where a few grand a year for being a director/co.sec and doing some admin is considered "excessive" by any normal standards. Would I pay an unconnected person a few grand a year to do the same thing? Yes. Would most people? I think, if you didn't happen to have a spouse and somebody offered to do a load of your admin for you for a couple of grand a year salary you'd bite their hand off.

Would you pay someone £11,000 a year for 2-3 hours of admin work a month?

If so, I'd like a job with you please.

If your company admin takes you longer than that then you are doing it wrong.

[TheCyclingProgrammer]

Statement
Top of page 45, 1.187:


So it appears it comes on top of the personal allowance, and a spouse with no salary or other income is likely to be able to receive £16K of dividends before the tax kicks in.

That's not ironclad, but that's the way it seems to read.

Maybe, lets wait and see.

Agreed. You can have her sign any cheques, send invoices, sign the corporate return, etc.

All good reasons but not really anything to do with her being a shareholder too; as I mentioned in the above post I was really referring to being able to claim ER on a future capital distribution on their shareholding.

[DaveB]

Actually there is a connection - albeit an indirect one. If you make your spouse a shareholder without also making them a company officer you have been very poorly advised - they won't be eligible to claim ER on their proportion of any capital distribution if you eventually liquidate the company. If they are a company officer, and have been for at least 12 months prior to liquidating, then they will be. Depending on their share and the amount of profits to be distributed that could be the difference in thousands of pounds of tax.

No, missing the point. You can do it, but there is no automatic assumption that by being one, you have to be the other.