Settlements legislation exception

[malvolio]

but only change the shareholdings on a very occasional basis. Don't even do it yearly...

Well yes, obviously. In my case three changes over 28 years.

[eek]

Kinda... Given dividends have to be paid in strict ratio of shareholding, the split is primarily driven by your individual tax positions and other income (if any). So do the sums around higher rate and things like child allowance (if applicable): it can always be changed as circumstances do.

but only change the shareholdings on a very occasional basis. Don't even do it yearly...

[malvolio]

Thank you, you confirmed what I was thinking.

Kinda... Given dividends have to be paid in strict ratio of shareholding, the split is primarily driven by your individual tax positions and other income (if any). So do the sums around higher rate and things like child allowance (if applicable): it can always be changed as circumstances do.

[cannon999]

It makes not a jot of difference to the settlements legislation but it may be helpful if you want to maintain majority control over your business. (Some agencies might also require this).

Thank you, you confirmed what I was thinking.

[TheCyclingProgrammer]

Just a point on this, and it's a much argued one. We've had a noteable number of accountants mention creating a 51/49% split in favour of the contractor. I can't remember the exact reasons. Probably something to do with a nod to the main person in the arrangement but it's been hotly debated as to whether it makes any difference whatsoever. Just thought I'd mentioned it as a few reputable people have mentioned it.

It makes not a jot of difference to the settlements legislation but it may be helpful if you want to maintain majority control over your business. (Some agencies might also require this).

[northernladuk]

Just a point on this, and it's a much argued one. We've had a noteable number of accountants mention creating a 51/49% split in favour of the contractor. I can't remember the exact reasons. Probably something to do with a nod to the main person in the arrangement but it's been hotly debated as to whether it makes any difference whatsoever. Just thought I'd mentioned it as a few reputable people have mentioned it.

[cannon999]

I think in the Arctic case the shares were given at incorporation so it makes no difference whether they are gifted then or transferred later.

Ok understood

[cannon999]

It needs to be an “outright gift” - ie no strings attached, no conditions or arrangements for the gifted shares to be returned etc.

The gifted property also needs to be more than just a right to income so they need to be ordinary shares with equal rights to votes and receive capital on winding up.

No I understand that I am more asking whether this has to be a gift of existing shares that you own already or whether setting up a company where your wife is 50% shareholder is ok too? So wife is 50% shareholder from inception.

[TheCyclingProgrammer]

It needs to be an “outright gift” - ie no strings attached, no conditions or arrangements for the gifted shares to be returned etc.

The gifted property also needs to be more than just a right to income so they need to be ordinary shares with equal rights to votes and receive capital on winding up.

I think in the Arctic case the shares were given at incorporation so it makes no difference whether they are gifted then or transferred later.

[eek]

As per the Arctic case the gifted shares are exempt from the settlements legislation. However what is considered as a gift? For example if at the time when the company was incorporated, both the husband and wife were allotted 50/50 shares - would this be still covered by the legislation? Is this still a gift? So effectively the husband found the company and made the wife an equal shareholder. Or is it important for the company initially to be 100% owned by the husband and then transferring shares to the wife.

It makes no difference provided a marriage is involved. The Arctic case confirms that shareholdings can be changed between husband and wife but change the shareholdings all the time.

[cannon999]

As per the Arctic case the gifted shares are exempt from the settlements legislation. However what is considered as a gift? For example if at the time when the company was incorporated, both the husband and wife were allotted 50/50 shares - would this be still covered by the legislation? Is this still a gift? So effectively the husband found the company and made the wife an equal shareholder. Or is it important for the company initially to be 100% owned by the husband and then transferring shares to the wife.