Reply to: Should I employ myself and my wife to pay salary?

[TheFaQQer]

I established my company only two months ago. Now some accountant told me it will be possible to add my wife as a shareholder retroactively (i.e from start of the company). Is this really possible?

Yes.

[anddrew]

http://forums.contractoruk.com/accou...e-company.html

http://forums.contractoruk.com/accou...d-company.html

All threads here

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

There is also a question hanging over making your wife a partner in your company. It can go horribly wrong if you start having problems. She will own half your company.

Thanks for this links.

I established my company only two months ago. Now some accountant told me it will be possible to add my wife as a shareholder retroactively (i.e from start of the company). Is this really possible?

[psychocandy]

Yes, I think paying slightly less at £624/month may be a better salary as there will be no NI/PAYE due on that amount and net dividends of up to £31,488.

For some reason my accountant recommended £600 salary though.

Laziness because £600 is a round figure I guess.

[Wanderer]

Yes, I think paying slightly less at £624/month may be a better salary as there will be no NI/PAYE due on that amount and net dividends of up to £31,488.

For some reason my accountant recommended £600 salary though.

You might want to pay your wife less salary depending on how much work she does for the company. If her input is negligible then just give her the shares/dividends and don't pay a salary - we hear that HMRC can get a bit grumpy if your spouse does no obvious work to earn her salary. I can't help but think of all those MP's wives who were paid a salary out of MPs expenses for doing bugger all though...

[pmeswani]

I don't think he's been with us yet

Can I help you with that coat?

[Craig@Clarity]

WHS. Unless the OP has already been in touch with the said Accountant outside this forum, I wonder how the Accountant has come to the said conclusion.

I don't think he's been with us yet

[cojak]

Yes, you're over-stretching yourself with IR35 Nick, unless you've seen the contract and know their working practices.

I wouldn't advise trying to FUD a contractor forum...

[pmeswani]

Just out of curiosity, what factors in the OP points towards being subject to IR35?

WHS. Unless the OP has already been in touch with the said Accountant outside this forum, I wonder how the Accountant has come to the said conclusion.

[Craig@Clarity]

From what you say in you query, I suspect you might be subject to the IR35 rules. If that is so, then it will be of no benefit to employ your wife, as the allowable deductions under IR35 are fixed and very limited. [/url]

Just out of curiosity, what factors in the OP points towards being subject to IR35?

[Kime OBrien]

IR35

Hi Andrew,

Employing your wife is common practice, but be warned that HMRC look closely at such arrangements in a small business, and you may be asked to justify her contribution to the functioning of the company for the deduction of her salary to be allowable for Corporation Tax purposes.

From what you say in you query, I suspect you might be subject to the IR35 rules. If that is so, then it will be of no benefit to employ your wife, as the allowable deductions under IR35 are fixed and very limited. Take advice from your accountant, if you have one, particularly as HMRC are tightening up on IR35, and have recently issued a 12-point "checklist" to determine whether a business is genuinely independent.


Nick O'Brien

<mod note>
Hi Nick,
Please read the T&C of this board. Blatant advertising is not allowed. You can ask admin to change your login to [email protected] and promote your company whilst advising posters.

[TheFaQQer]

If the couple are unmarried then of course it would not (currently) be split upon seperation, so from this point of view adding a partner to whom you are not married as a shareholder exposes greater financial risk.

Not being married opens the possibility of a settlements legislation investigation as well - Arctic settled it finally for married couples, since there is an explicit exemption for married couples.

If not married, then you are probably going to get stuffed under the Ramsay principle.

[ASB]

There is also a question hanging over making your wife a partner in your company. It can go horribly wrong if you start having problems. She will own half your company.

In reality it should make little difference. The company will be matrimonial property anyway. As such it's value just goes into the pot of assets to be split. Though actually agreeing a value can be difficult. Retained shareholders funds less the productive depreciating assets is probably a fair starting point.

I do take the point though that if the spouse is a significant shareholder it can make the process more difficult if they are reluctant to pass their shares to the other spouse at a realistic price.

If the couple are unmarried then of course it would not (currently) be split upon seperation, so from this point of view adding a partner to whom you are not married as a shareholder exposes greater financial risk.

[northernladuk]

http://forums.contractoruk.com/accou...e-company.html

http://forums.contractoruk.com/accou...d-company.html

All threads here

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

There is also a question hanging over making your wife a partner in your company. It can go horribly wrong if you start having problems. She will own half your company.

[northernladuk]

This is asked weekly and is a hot topic. What you want to do is blatent avoidance so there is an element of risk you have to understand and be happy with. Giving her shares if you have a big lump in the company will certainly be a problem.

I will try dig a few of the longer threads out.

Oh this is also covered in detail in the newbie guides to the right. Read those first.

[anddrew]

Thanks for your answer!

My accountants ignore me, I will leave them.