Reply to: Reallocating Shares - Red Flag for HMRC S660??

[malvolio]

Corp tax- true . My mistake.
I use it to reduce potential any higer tax bracket and provide some savings to my children

You can do that by paying yourself less...

What you're not grasping is that the only way to make it work is to put the money out of your reach forever (which is itself pretty tricky to achieve). However you do that won't make any difference to your personal income or your CT bills, and any taxable income arising will be charged to your children anyway.

[contractor55]

Corp tax- true . My mistake.
I use it to reduce potential any higer tax bracket and provide some savings to my children

[Clare@InTouch]

The point being a savings plan for my children, rather then come out of my own money , it is via the co ltd so potentially reducing my corp tax and my own tax ?????

It may reduce your own tax as you'd not be paying it from your own income, but dividends don't affect CT.

[contractor55]

The point being a savings plan for my children, rather then come out of my own money , it is via the co ltd so potentially reducing my corp tax and my own tax ?????

[malvolio]

Children as shareholders- even if you show you do not touch the money e.g they use it as savings ?

Yes. It's what S660 is all about. But even if it weren't and you put it in a trust that ensured it was never available to you, you wouldn't ever get it back, nor would you save any tax, so what would be the point?

[contractor55]

Children as shareholders- even if you show you do not touch the money e.g they use it as savings ?

[Clare@InTouch]

that wouldn't change the fact that (as Greg@CapitalCity
has highlighted) any income to your child will be treated as income for yourself (except the frst £100)

So its still a non starter unfortunately

I guess if you have grown up kids/parents earning <£35k then thats another story though

Not really, it would still be caught under S660. There is an exemption for your married partner, but not for kids/parents/girlfriend/others.

[Fandango]

that wouldn't change the fact that (as Greg@CapitalCity
has highlighted) any income to your child will be treated as income for yourself (except the frst £100)

So its still a non starter unfortunately

I guess if you have grown up kids/parents earning <£35k then thats another story though

[contractor55]

Rather than re-allocate your shares so it shows as a gift, can you not shut down your current company and recreate a new one for the start of your next contract – if you are fortunate enough to be in such as position, and structure the shares from day 1 -Yourself 40%, partner 40%, children 20% etc- this will not show as re-allocating shares as a gift?

[Fandango]

Yes, it gets caught by the settlement provisions - so any income received by your son, is treated as income for you, and as such you are taxed on it. There is an exemption for the first £100 in income paid to your son - which is a lot of money for a 2.5 year old, but not much of a tax saving for you

See TSEM4300 - Settlements legislation: settlement for minor child who is neither married nor in a civil partnership

Thanks Greg for your reply that's very helpful

cheers

[Old Greg]

Admin, please expect a take down notice from the Cat Protection League.

[Greg@CapitalCity]

So following on from that then would there be any issue in adding my son (2.5 years old) as a shareholder to the company, again in order to be able to draw more dividends from the company?Cheers

Yes, it gets caught by the settlement provisions - so any income received by your son, is treated as income for you, and as such you are taxed on it. There is an exemption for the first £100 in income paid to your son - which is a lot of money for a 2.5 year old, but not much of a tax saving for you

See TSEM4300 - Settlements legislation: settlement for minor child who is neither married nor in a civil partnership

[psychocandy]

You would have to divorce your sheep and your sister first I believe but in Wales I am sure it will be acceptable.

My sister and my sheep are the same thing.

[northernladuk]

What if I marry my cat?

You would have to divorce your sheep and your sister first I believe but in Wales I am sure it will be acceptable.

[psychocandy]

What if I marry my cat?