This article discusses both Arctic Systems Ordinary share split and Patmore case (Alphabet Shares).
Pros and cons of dividends paid to spouses & civil partners
- Visitors can check out the Forum FAQ by clicking this link. You have to register before you can post: click the REGISTER link above to proceed. To start viewing messages, select the forum that you want to visit from the selection below. View our Forum Privacy Policy.
- Want to receive the latest contracting news and advice straight to your inbox? Sign up to the ContractorUK newsletter here. Every sign up will also be entered into a draw to WIN £100 Amazon vouchers!
Reply to: Wife shares gifting
Collapse
You are not logged in or you do not have permission to access this page. This could be due to one of several reasons:
- You are not logged in. If you are already registered, fill in the form below to log in, or follow the "Sign Up" link to register a new account.
- You may not have sufficient privileges to access this page. Are you trying to edit someone else's post, access administrative features or some other privileged system?
- If you are trying to post, the administrator may have disabled your account, or it may be awaiting activation.
Logging in...
Previously on "Wife shares gifting"
Collapse
-
Originally posted by SueEllen View PostAre you dragging up this thread because you are a misogynist?
Simple admin tasks include filing a Company Annual Return at Companies House or do you think it's particularly difficult to do?
Leave a comment:
-
Originally posted by pacontracting View PostThe role of a company secretary is to ensure that the company complies with it's legal obligations. This role can also be undertaken by a director. A company secretary doesn't need to file / type / make the tea! ;-)
Simple admin tasks include filing a Company Annual Return at Companies House or do you think it's particularly difficult to do?
Leave a comment:
-
Originally posted by SueEllen View PostAs a company secretary she doesn't legally have to do the bookkeeping. It's up to the director(s) who is responsible for the bookkeeping though the company secretary should be given some simple administrative tasks e.g. filing Companies House return to go along with their legal responsibilities.
There have been posts on here where the bookkeeping was left to the spouse as the other director/company secretary and they couldn't cope so they just hid stuff from the other director, who was the income earner, causing loads of problems with HMRC.
Also if zafoeta has a bookkeeping system that works for him and the new accountant he chooses, he should just keep doing it and delegate other admin tasks to her. That way when his wife goes back to work there are no issues in him taking over.
Simply occupying the role of director or company secretary would warrant compensation. They wouldn't have to do the books / file etc but they would be held responsible if these tasks were not done - hence the justification for the salary.
To the OP - I'm always of the opinion that if you want to bring your wife on board, set up a new company with her and you as shareholders (base the split on how much work / reward you'll expect to put it / receive and ensure the shares are ordinary, of the same type with voting rights etc) and both of you as directors. No reason why you can't keep your current company. If and when she decides to go back to work, start trading from your current company again and close down your joint one. Both of you setting up a company from scratch would mean no gifting, no settlement etc as you were both in it from the beginning.
No reason why you can't have more than one company on the go at the same time, each with a different reason for existing.Last edited by pacontracting; 22 March 2016, 13:02.
Leave a comment:
-
Originally posted by WordIsBond View PostJust make your wife company secretary or a director, have her do the bookkeeping, and pay her a small salary. Give her an equal number of shares, and pay out dividends to both of you.
There have been posts on here where the bookkeeping was left to the spouse as the other director/company secretary and they couldn't cope so they just hid stuff from the other director, who was the income earner, causing loads of problems with HMRC.
Also if zafoeta has a bookkeeping system that works for him and the new accountant he chooses, he should just keep doing it and delegate other admin tasks to her. That way when his wife goes back to work there are no issues in him taking over.
Leave a comment:
-
Originally posted by WordIsBond View PostI have read (don't know if true) that HMRC does use Companies House records to target investigations -- if so, you could even be waving a red flag saying, "Investigate me."
.
*I'm pretty sure that's a disclosure requirement but don't quote me. It's half six on a Saturday evening.
Leave a comment:
-
Alphabet shares, even if they have the same voting rights, are a disaster unless there's a commercial reason for it. With a bit of careful planning it's not important anyway.
When your wife returns to work presumably she'll be taxed at the basic rate as you? You say earning considerably so I assume 40% tax for each. Therefore if she receives some of the divi rather than you, then it's the same tax cost. And remember first £5k divi is tax free for so if she remains a shareholder you get 2 of those.
If your accountant is suggesting abc shares rather than advising similar to the above, you should, as recommend above, look around.
Leave a comment:
-
There's some risk with alphabet shares, unless there is a business reason for them. In your case, you haven't given any business reason (only tax reason), which means it is risky. I have read (don't know if true) that HMRC does use Companies House records to target investigations -- if so, you could even be waving a red flag saying, "Investigate me."
It is clearly safer if the shares have equal rights.
I don't see why it is necessary, though. Just make your wife company secretary or a director, have her do the bookkeeping, and pay her a small salary. Give her an equal number of shares, and pay out dividends to both of you.
If she goes back to work, you could close down the company and start a new one, but why? Just have her gift some of the shares back to you and resign her company office. Leave her with 1/7th of the company. Then, you can pay a dividend every year that gives her £5K (tax free) and gives you £30K, and pay yourself a salary of around £10K. Sorted.
You don't need to have alphabet shares, and you don't need to close down your company. You just need to gift shares to her, now that she's playing a role in the company, and have her gift most of them back once she isn't playing a role (retaining some out of appreciation for her past help, of course). Sorted, justifiable from a business perspective, etc.
Leave a comment:
-
Originally posted by mudskipper View PostI've heard conflicting advice on this - will try and get more detail.
Leave a comment:
-
Originally posted by northernladuk View PostIs your an accountant a contractor specialist. iMO the alphabet shares advice from a contractor accountant isnt what I'd expect.
Leave a comment:
-
As NLUK said change accountants to one who understands about knowledge workers especially IT.
Any accountant who says alphabet shares should be used should be avoided as it's seen as a straight tax dodge by HMRC.
In addition a contractor accountant would ask you whether you can make your wife company secretary. That way if you choose, you can pay her a tax efficient salary to compensate for her legal responsibilities as an officer of the company who supports the director(s). There are advantages in doing this e.g. credits for NI contributions. Once she goes back to work she can simply resign from the position or you could sack her as she won't have time to carry out the responsibilities that come with the role, work and look after a child.
Also while we can tell you what is valid now no one including an accountant can tell you what the tax laws will be in 2 or 3 years time e.g. no one knew about the dividend tax 2 years ago, so it's worth changing now to an accountant who deals with contractors.Last edited by SueEllen; 12 March 2016, 15:01.
Leave a comment:
-
Is your an accountant a contractor specialist. iMO the alphabet shares advice from a contractor accountant isnt what I'd expect.
Leave a comment:
-
Wife shares gifting
Hi,
I have read a fair bit around shares gifting to the wife on this forum and so far I basically learnt that HMRC shouldn't see it as tax avoidance as long as the shares have voting rights.
I am thinking now to make my wife a shareholder of my ltd, as we had a little girl and she is not working anymore. However, it's a bit more complex than this, as she might return to work in around one-three years down the line and earn considerably. I was wondering what sort of options I have in this case.
Basically three questions/options:
1. If I gift her shares and she gifts them back down the line, is this legally a tax avoidance scheme or is it ok?
2. To better split dividends, my accountant suggested to have class A and class B shares, both with voting rights. I would give my wife class B shares, and I would get class A shares (me being the sole director). Is this an acceptable setup (legally) from HMRC point of view or would this be a clear tax avoidance scheme?
3. If I gift her class A shares, and once she returns to work earning considerably, would it be legal to shut down the existing ltd (or place it dormant) and start a new ltd with me as sole shareholder again?
Any suggestions would be very welcome.
Thanks
WTags: None
- Home
- News & Features
- First Timers
- IR35 / S660 / BN66
- Employee Benefit Trusts
- Agency Workers Regulations
- MSC Legislation
- Limited Companies
- Dividends
- Umbrella Company
- VAT / Flat Rate VAT
- Job News & Guides
- Money News & Guides
- Guide to Contracts
- Successful Contracting
- Contracting Overseas
- Contractor Calculators
- MVL
- Contractor Expenses
Advertisers
Contractor Services
CUK News
- Streamline Your Retirement with iSIPP: A Solution for Contractor Pensions Sep 1 09:13
- Making the most of pension lump sums: overview for contractors Sep 1 08:36
- Umbrella company tribunal cases are opening up; are your wages subject to unlawful deductions, too? Aug 31 08:38
- Contractors, relabelling 'labour' as 'services' to appear 'fully contracted out' won't dupe IR35 inspectors Aug 31 08:30
- How often does HMRC check tax returns? Aug 30 08:27
- Work-life balance as an IT contractor: 5 top tips from a tech recruiter Aug 30 08:20
- Autumn Statement 2023 tipped to prioritise mental health, in a boost for UK workplaces Aug 29 08:33
- Final reminder for contractors to respond to the umbrella consultation (closing today) Aug 29 08:09
- Top 5 most in demand cyber security contract roles Aug 25 08:38
- Changes to the right to request flexible working are incoming, but how will contractors be affected? Aug 24 08:25
Leave a comment: