Husband and wife company question

[lambrini_socialist]

ok i think it's time to bite the bullet and set up an income shifting arrangement. can anyone point me to any advice for what i need to do in order to give (or sell?) some MyCo shares to my wife?

cheers.....

[THEPUMA]

I've got a load of shares in BT - doesn't mean I do any work for them.
The shares reflect my investment in monitary value in that company, if your co started with £100, and £50 came from the Mrs then she has a 50% share holding.

The difference is that the BT share acquisition was a commercial arm's length transaction whereas you wouldn't have let anyone other than your wife acquire the shares in your company for £50.

Shouldn't make any difference this tax year but it probably will when the new income shifting legislation is introduced next tax year.

[expat]

I've got a load of shares in BT - doesn't mean I do any work for them.
The shares reflect my investment in monitary value in that company, if your co started with £100, and £50 came from the Mrs then she has a 50% share holding.

That's what I was going to say.

A shareholder is someone who owns a share of the company, and they receive dividends from the company's profit.

The normal way to pay someone for work that they do for the company is a salary.

There is no connection between a shareholder and an employee.

I'll be the major shareholder as certainly in the next couple of years I'll be bringing in money and she'll just be helping me in running the business. However without her skills the other business opportunities couldn't be pursued so she needs to be paid and given dividends.

Why? I've never been given dividends by any company that I have worked for.

[London75]

Well, yes if only that were the way the government saw it!

[Bluebird]

I've got a load of shares in BT - doesn't mean I do any work for them.
The shares reflect my investment in monitary value in that company, if your co started with £100, and £50 came from the Mrs then she has a 50% share holding.

[London75]

Because she'll be marketing and web site designing including the graphical work, I'm sure she'll easily be able to justify the salary, 3 years ago when she left work as a developer she was on 30k+ so only really needs to do 4-6 hours a week to justify it on those lines.

I'm thinking I might as well go 50/50 as the intention is a family business that will grow and she'll be an equal part of it.

I'll read up on s660 but I'm hoping as she will actually be a working partner albeit less so in the first couple of years that we're legitimately using the company structure.

Cheers, Andy

[Zen Contracting]

As things stand at the moment there is no problem with what you advocate. However, you should be careful about paying your wife a salary that reflects the amount of work she truly does for the company e.g. if she does an hour or two a week of bookkeeping and gets say £5,435 a year for it then HMRC might try to invoke s660. A good approach to managing this might be to get your wife to keep detailed time sheets showing what she does and the hours spent working.

David.

[moorfield]

Is a 7:3 split of 10 shares suitable or is anything other than 100% shares for me a big flag saying "investigate me?" This is the level at which I see her input, commitment and risk.

WHS above. Do a Tarrant and go 50/50 with the missus. Be a dirty income shifter while you can.

[London75]

Thanks, just want to be reasonable and fair in setting things up but not get investigated for a stupid error.

Quite right, my wife isn't working so it's a shame to waste that lovely tax allowance and get her working!

[Lewis]

I'm just setting up a Ltd after careful trawling of these forums and other sites but now have a quick question about making my wife a shareholder.

There is the complete intention that she'll work for the company but until I get on my feet and sorted and settled in my current contract I'm not going to have time to bring in the business.

I'd obviously like to make her a shareholder for tax reasons and she'll be doing all the admin and get started on the marketing and websites for other aspects I plan for the business.

Do HMRC need to see some sense in the split of shares? I'll be the major shareholder as certainly in the next couple of years I'll be bringing in money and she'll just be helping me in running the business. However without her skills the other business opportunities couldn't be pursued so she needs to be paid and given dividends.

Is a 7:3 split of 10 shares suitable or is anything other than 100% shares for me a big flag saying "investigate me?" This is the level at which I see her input, commitment and risk.

Cheers, Andy

I assume she does not work, otherwise there is less of a tax advantage. You can go 50/50 without any worries at the moment. Things may change after the next budget, it all depends upon the Income Shifting MkII legislation. You may then have to transfer shares. No point trying to pre-empt what the legislation will be, so do whatever suits you best for now.

[cykophysh39]

Oh Yeah I think you have just described exactly the case that most contractors do.

[London75]

I'm just setting up a Ltd after careful trawling of these forums and other sites but now have a quick question about making my wife a shareholder.

There is the complete intention that she'll work for the company but until I get on my feet and sorted and settled in my current contract I'm not going to have time to bring in the business.

I'd obviously like to make her a shareholder for tax reasons and she'll be doing all the admin and get started on the marketing and websites for other aspects I plan for the business.

Do HMRC need to see some sense in the split of shares? I'll be the major shareholder as certainly in the next couple of years I'll be bringing in money and she'll just be helping me in running the business. However without her skills the other business opportunities couldn't be pursued so she needs to be paid and given dividends.

Is a 7:3 split of 10 shares suitable or is anything other than 100% shares for me a big flag saying "investigate me?" This is the level at which I see her input, commitment and risk.

Cheers, Andy