Reply to: Child maintenance through dividends?

[WordIsBond]

Is it possible to wind down my existing ltd and spin up a new one with 2 classes of shares - one for the director ie me and one my wife who would solely be a shareholder.

Of course you can, if it's mutually agreed. But if you are mutually agreeing, you could probably just use your existing ltd and modify things as needed.

There are many potential problems, as others have noted. There are many reasons why this could go pear-shaped. But without knowing the people involved and the exact details of your situation, none of us could really say what is good and what is bad in your particular case.

The fact that it is taxable to your ex is not necessarily a problem -- it may be cheaper to structure it with enough to compensate her for the tax she would have to pay, than it would be to pay child maintenance out of your after tax income. It partly depends on whether she has other income. Just be aware that the tax hit she'll have needs to be reflected, and that you don't want to leave her short of what she needs to take care of your children.

If things are that amicable between you that you think having her as a shareholder of your company is a good idea, then perhaps you should consider trying to mend your relationship enough that you can stay together. If you can treat each other with respect and consideration, that would be better for the children (and the finances, for that matter). If you can't treat each other well, you'd best not try to be business partners.

[SueEllen]

So he is a director and she is a director.

How does he close the ltd without her agreeing and wanting/taking a cut ?

You forget he's also an individual so nothing can stop him setting up a new company and contracting through that.

[TheCyclingProgrammer]

So he is a director and she is a director.

How does he close the ltd without her agreeing and wanting/taking a cut ?

If she’s a shareholder and her dividends entitle her to a capital distribution on winding up (which they should do to avoid settlements issues) then she is entitled to a cut.

[radish2008]

Then that's what he should do.

So he is a director and she is a director.

How does he close the ltd without her agreeing and wanting/taking a cut ?

[SueEllen]

I'm not sure OP really has any say in that, short of shutting the company down.

Then that's what he should do.

[TheCyclingProgrammer]

get wife off the ltd asap

I'm not sure OP really has any say in that, short of shutting the company down.

[kaiser78]

I am a few steps ahead in the divorce process and all the advice given to me was to keep company and maintenance totally separate, get wife off the ltd asap and have it written in the financial order that she has no comeback to the ltd going forwards.

[Old Greg]

Is it worth considering loaning the funds directly to the child in a fast depreciating foreign currency via the Oude Joris Dutch Antilles Child Welfare Trust?

[HugeWhale]

It may or may not be relevant or of interest. Child maintenance is calculated on your declared earnings. Some more info here:

https://www.change.org/p/theresa-may...iter=550184939

[TheCyclingProgrammer]

Louisa makes a good point and of course OP’s wife might not appreciate having to do an annual tax return either (or continue doing one as she currently does).

[Louisa@AardvarkAccounting]

Also, just touching on this comment:

If and when we split I would then be able to make dividend payments to her direct from the company

If you were hoping to effectively pay the child maintenance to her as dividends through your company, she might have something to say...

Child maintenance payments are not included as income and don't impact taxable benefits, such as income support.

Whereas, if you were to pay her dividends, she is likely to have tax due on these and it may impact what benefits she can claim too, as this would be included as part of her income for the year.

HTH

[TheCyclingProgrammer]

Happy to be corrected, but I think that might fall foul of S660 income shifting rules.

Not necessarily, OP would clearly no longer retain any interest in the shares or any of the distributed income.

But I agree with what NLUK said.

[Darren at Fox-Bartfield]

Keep your business well away from your ex wife. Nothing good can come from it at all.

Ditto.....best to keep things separate

[northernladuk]

Keep your business well away from your ex wife. Nothing good can come from it at all.

[Manic]

Hi All,
I'm a semi regular poster, but hopefully I'll be allowed this temporary user ID to mask my normal one for obvious reasons.

It is looking increasingly like my wife and I are going to separate. She's currently a 50% shareholder, director, and is paid a nominal wage to do basic book keeping etc. by my ltd. If we split that will obviously change.

Is it possible to wind down my existing ltd and spin up a new one with 2 classes of shares - one for the director ie me and one my wife who would solely be a shareholder.

If and when we split I would then be able to make dividend payments to her direct from the company. Assuming I gift the shares to her before we split, I can't see a legal reason why this wouldn't be allowed, but am willing to be corrected.

Happy to be corrected, but I think that might fall foul of S660 income shifting rules.