thanks all for your contributions - really helpful. I would expect contributions to be roughly the same i.e he will almost double turnover. I think I will stop being stingy and trying to do myself and, as you say, get my accountant to do it so that it is assessed properly. Sounds like an uneven split of ordinary shares or adding a letter class of ordinary for him might be the way to go, but I'll let the accountant sort it out I think. I think my accountant was suggesting the different class of share to cover any periods when one of us wasn't working?
Thanks for the advice, much appreciated. Any further thoughts on what makes most sense commercially welcome.
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Reply to: Adding Share Class to a Limited Company
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Previously on "Adding Share Class to a Limited Company"
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Originally posted by fabhead View PostIf I keep the structure as is only I can take dividends. If he gets a share and can take dividends too would it be more efficient for him to take dividends as well or for me to take more dividends and pay more tax and keep him as low rate tax payer with salary only (as someone has to take more dividends somewhere to replace his permanent salary). We will never get married but are co habiting and have joint mortgage etc and have done for many years so what I put in place now can be the final solution.
Most importantly you need to make sure you talk to an accountant and its dealt with properly - any transfer of share, regardless of consideration, needs to be assessed for CGT, which would require a valuation to be made to determine if there is any liability (there's a good chance any gain is within the CGT allowance).
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Originally posted by vetran View Postdepends if there is a large imbalance and an element of 'bounty'.
If Miss / Mr A contributes £100k and Mr B £10k yet they both draw £42K then its difficult to see why HMRC would see it as fair.
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Originally posted by SueEllen View PostMake them company secretary.
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That's very much how I see it, taking him on as a business partner. And yes he'll get a salary. Doesnt seem that different to ither small business with father and son employees etc to me but I wanted to explore the options.
If I keep the structure as is only I can take dividends. If he gets a share and can take dividends too would it be more efficient for him to take dividends as well or for me to take more dividends and pay more tax and keep him as low rate tax payer with salary only (as someone has to take more dividends somewhere to replace his permanent salary). We will never get married but are co habiting and have joint mortgage etc and have done for many years so what I put in place now can be the final solution.
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Originally posted by TheCyclingProgrammer View PostI'm not convinced the settlements legislation is an issue here, I'm not even sure giving them a share for nothing would count as a settlement in this case as there's no element of bounty IMO - they aren't getting something for nothing, they are going to be fee earning and bringing in profit for the company. Add to that there is no tax avoidance motivation so I don't think it's something you need to worry about. You're really just taking on a business partner and that to me is a normal commercial transaction which the settlements legislation is not designed to catch.
That said I'm not convinced a messy share structure is the best way to go. A far simpler option would be to pay your partner a good salary for the work they do and look at it as an expansion of your business.
If you eventually get married then you could still give them ordinary share, make them a director and share the profits in your successful (hopefully) business together.
depends if there is a large imbalance and an element of 'bounty'.
If Miss / Mr A contributes £100k and Mr B £10k yet they both draw £42K then its difficult to see why HMRC would see it as fair.
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Originally posted by TheCyclingProgrammer View PostI'm not convinced the settlements legislation is an issue here, I'm not even sure giving them a share for nothing would count as a settlement in this case as there's no element of bounty IMO - they aren't getting something for nothing, they are going to be fee earning and bringing in profit for the company. Add to that there is no tax avoidance motivation so I don't think it's something you need to worry about. You're really just taking on a business partner and that to me is a normal commercial transaction which the settlements legislation is not designed to catch.
That said I'm not convinced a messy share structure is the best way to go. A far simpler option would be to pay your partner a good salary for the work they do and look at it as an expansion of your business.
If you eventually get married then you could still give them ordinary share, make them a director and share the profits in your successful (hopefully) business together.
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I'm not convinced the settlements legislation is an issue here, I'm not even sure giving them a share for nothing would count as a settlement in this case as there's no element of bounty IMO - they aren't getting something for nothing, they are going to be fee earning and bringing in profit for the company. Add to that there is no tax avoidance motivation so I don't think it's something you need to worry about. You're really just taking on a business partner and that to me is a normal commercial transaction which the settlements legislation is not designed to catch.
That said I'm not convinced a messy share structure is the best way to go. A far simpler option would be to pay your partner a good salary for the work they do and look at it as an expansion of your business.
If you eventually get married then you could still give them ordinary share, make them a director and share the profits in your successful (hopefully) business together.
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are you sure you want pics?
he's not that pretty
So to clarify, we are, both contractors, similar rates (I'm higher, obv), no one is a housewife pretending to be a company secretary etc. The main aim of the exercise is not primarily to safeguard my company, although that is secondary. The primary aim is to maximise profits, minimise tax and expenses. Any salary/dividends from either party will be spent on our joint household/kids so there is no great reason to keep everything separate from my point of view - unless you tell me different. It just seemed to me to be more efficient given that we do same kind of thing, similar earnings, 50/50 finances etc. (and how crap he is at admin and paperwork).
I suppose I am giving him a share but he is also submitting monthly invoices into the company.
My accountant seemed to think this was ok but wants 250 plus VAT to set it up. It seems fairly easy to do myself.
So for 2 contractors, similar rates, live together, mirror wills, children, is there any benefit to having separate companies or any disadvantage to having 1? How should it be structured if we keep it as one?
What's settlements legislation?
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Originally posted by mudskipper View PostOP's partner is male if you read the post.
But I would echo the advice to separate your affairs unless you are very confident in the future of the relationship.
Good spot!
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OP's partner is male if you read the post.
But I would echo the advice to separate your affairs unless you are very confident in the future of the relationship.
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If she is buying a share in the business, what price is she paying for it?
If she isn't buying a share in the business, and you are giving it to her, you need to watch the settlements legislation carefully because you wouldn't want to end up with a whacking great tax bill because you did it wrong.
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Originally posted by northernladuk View PostGet her to set her own up and keep them separate IMO... Failing that why not ask your accountant?
If she isn't your wife I'm not sure how tax works if you share the proceeds of your or his work at higher rate & lower rate tax. Could HMRC deem the higher rate earner the main tax payer and shaft them?
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Get her to set her own up and keep them separate IMO... Failing that why not ask your accountant?
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