Dividends?

[chubba]

Far too much information.

You sound confused.

Just bend over and take the punishment as it comes. Ltd Co, as much out in "expenses" as possible and pay corp tax on the rest is still the best way at the minute.

Wait until new legislation on NICs or any other tax on divs before worrying about what to do next.

[Gixxer6]

Can anybody tell me how the dividend gets paid to an employee of a managed service company (MSC). When you sign up for the MSC do you get given shares in the MSC? Do the number of shares you get equate to your contract rate? When the MSC pays a dividend it must be an amount per share so how does this work so that each member gets the correct amount of money back as dividend?

It has been pointed out numerous times that as employees of our company we get penalised taking dividends, yet when you own shares in a company you don't work for there is no problems with dividends. I feel that there must be a way we can own shares in someone elses company without working for it and they can hold shares in your company without working for it. You should be able to come to some agreement where the dividend you receive from their company corresponds to the dividend they receive from your company.

The other thing I was think about is a Unit Trust or OEIC. Could we create a fund that effectively invests in our limited companies? The fund would pay £1 to buy 95% ownership of your company. You as an individual then buy a unit in the fund for £1. Your company continues to invoice and receive contract income. Your company then pays a dividend with the bulk going to the fund as they are the major shareholder. The fund then pays a distribution for which you as a personal unit holder receive a distribution. There would be no NI on this as it is a personal investment in a unit trust/oeic.

The benefit of a UT or OEIC is that it is not a company and could not therfore be treated as a MSC. I am unsure about ownership rules though and what percentage of a company a fund can hold before it is classed as taken over.

I haven't got a clue whether something like this would work and I will happily be shot down in flames. It does seem however, that now we have all been herded into our own limited companies I reckon the next step is NIC on dividends for small companies. (<300K profit). We could easily get out of that by combining forces to create a bigger company with multiple directors but. . . is that then treated as a MSC and hey presto subject to "employee" + "employer" taxation.

Any thoughts or ideas?