Reply to: Limited Company - Income Splitting yes or no?

[northernladuk]

I think someone is thinking that dividends have an impact on CT and that someone has no idea what the Ramsay Principle is all about

What was that about speaking to your accountant again?

Funny thing is... Anyone with a hole in their arse would have asked their accountant first and not needed to post on here. If people feel the need to post on here and don't think to ask their accountant or are purposely not doing for one reason or another are looking for some dodgy answer we will not give them.. So the advice is wasted really... Will still point it out though

[malvolio]

Am I missing something here?
If you are only earning £25k why would you want to split dividends?

I think someone is thinking that dividends have an impact on CT and that someone has no idea what the Ramsay Principle is all about

What was that about speaking to your accountant again?

[Sausage Surprise]

sorry i couldn't find any similar posts.
i was just thinking if i could set up a second ltd for my partner, obviously to reduce my corporation tax in 2011-2012.
i'm contracting outside ir35, earning under £25,000 per annum.
£589 per month or £7072 per year in wages and £3000 expenses would leave me roughly £15,000 in profit or £12,000 net dividends and £3,000 ct.
so it means a lot to me if i can avoid £1500 in ct through paying just over £589 per month into the other ltd.
what do you think?
will it be anywhere close to s660?
thanks in advance

Am I missing something here?
If you are only earning £25k why would you want to split dividends?

[Wanderer]

We really don't care if you do it wrong so just go an do it however you want to.

Good luck.

[northernladuk]

off/ Let's say I want to be in more control on both my matters and the professional I pay.Doest this satisfy you or there will be other stupid questions?

Have a look through here see if there is anything there that might help..

gifting shares site:forums.contractoruk.com/accounting-legal/ - Google Search

Interesting that most of the questions asked about how to gift shares has a 'speak to your accountant' response... and not from me.

[garnet]

Let see. You pay a professional to give you advice and do this type of stuff for you...or you can ask on a public forum and get advised to speak to your professional.

off/ Let's say I want to be in more control on both my matters and the professional I pay.Doest this satisfy you or there will be other stupid questions?

[Jessica@WhiteFieldTax]

I will ask him. I am asking here because I want to know what am I doing.
I see 2 options:
-Using form sh01 to issue more shares and in my AR to specify who do they belong to(my wife)
-Giving a gift to my wife - 50% of my shares. How is is done?

Which one will not cost me anything in tax?
Or is there a another way?

So long as you are Married or in a Civil Partnership, then either is likely to be acceptable as things stand at the moment.

Caveat (a) the law may change in the future - its parked for now, with no indication of it being resurrected.

Caveat (b) this is assuming there is nothing strange happening, eg EIS or different share classes. I'm assuming a typical PSC with one class of share?

Caveat (c) don't make changes too often. No hard and fast rule, but more than once a year is IMV a risk, although quite how HMRC would attack I don't know.

[northernladuk]

I will ask him. I am asking here because I want to know what am I doing.
I see 2 options:
-Using form sh01 to issue more shares and in my AR to specify who do they belong to(my wife)
-Giving a gift to my wife - 50% of my shares. How is is done?

Which one will not cost me anything in tax?
Or is there a another way?

Let see. You pay a professional to give you advice and do this type of stuff for you...or you can ask on a public forum and get advised to speak to your professional.

[garnet]

Your accountant's advice is on the right track, go back them and ask them to tell you exactly how you go about issuing the shares. It's not a difficult process but you should be very careful - if you mess it up it will cost you and your wife thousands in tax...

I will ask him. I am asking here because I want to know what am I doing.
I see 2 options:
-Using form sh01 to issue more shares and in my AR to specify who do they belong to(my wife)
-Giving a gift to my wife - 50% of my shares. How is is done?

Which one will not cost me anything in tax?
Or is there a another way?

[Wanderer]

How can I make her 50% shareholder now?
Is there anything I need to worry about e.g S660?

Your accountant's advice is on the right track, go back them and ask them to tell you exactly how you go about issuing the shares. It's not a difficult process but you should be very careful - if you mess it up it will cost you and your wife thousands in tax...

[Murder1]

Back on this topic again.
At the moment I own 100% of the shares (100) of my LTD.
My accountant advises I make my wife 50% shareholder and also employ her in the ltd co on ~£8000/pa.She will be doing actual work, so justifying her being an employee is not a problem should HRMC query that.
My questions are:
How can I make her 50% shareholder now?
Is there anything I need to worry about e.g S660?

Won't your accountant facilitate the share transfer/sale?

[northernladuk]

Back on this topic again.
At the moment I own 100% of the shares (100) of my LTD.
My accountant advises I make my wife 50% shareholder and also employ her in the ltd co on ~£8000/pa.She will be doing actual work, so justifying her being an employee is not a problem should HRMC query that.
My questions are:
How can I make her 50% shareholder now?
Is there anything I need to worry about e.g S660?

Why don't you ask your accountant?

[garnet]

Back on this topic again.
At the moment I own 100% of the shares (100) of my LTD.
My accountant advises I make my wife 50% shareholder and also employ her in the ltd co on ~£8000/pa.She will be doing actual work, so justifying her being an employee is not a problem should HRMC query that.
My questions are:
How can I make her 50% shareholder now?
Is there anything I need to worry about e.g S660?

[Wanderer]

thank you for taking the time replying. but i'm going back to my question, would i not be much safer with a second ltd?

I don't think there is any advantage. If it came to the nuclear option then HMRC could potentially just wave away the new LTD structure as a veil and treat things as if it didn't exist.

I'd recommend you just pay a salary, it's simple to set up and lots of people do it. It will save all the extra admin (and expense if you value your time) of running a second company.

[johnbig]

thank you for taking the time replying. but i'm going back to my question, would i not be much safer with a second ltd?
i ended up doing all the paperwork myself as the accountant was only bothered to charge me a fee upfront when registering with him.
and then he didn't even send CT41G (New company details) to HMRC.
i've started doing all myself to avoid penalties so as i've become more familiar with p11calculator, p46 p11 p14 p35 p60 annual return, changing accounting refference dates to line up. and i can handle the payroll, and dividends vouchers, the accountant will actually do the corporation tax return.
have i covered it all? quite a waste of money £500 to the accountant just for the corporation tax.
out of topic i'm thinking to go for an accountancy course myself now.
to get back to the topic, if this is all i've got to do regarding the company, as the accountant is not doing anything or teaching me what is to be done, i can handle doing this for 2 companies.
am i wrong to think i can get aways with paying invoices of £700 a month to the second company? it will only cost me £200 quid formation and corporation tax.
still £1000 savings on my corporation tax, and no family business tax or s660 i hope.
thank you for your views!