Spouse Shareholding & HRT

[filthy1980]

Question

I’ve never bothered adding the other half as a shareholder / employee of my ltd as she earns 35k and always thought she’d be too close to the higher rate tax threshold anyway so wasn’t much point

But in a position now where we need to fund a house renovation so I’m budget forecasting and trying to extract as much from the Ltd profits as possible whilst avoiding the higher rate tax if possible

I’m thinking as a shareholder I could award here say 6k share of the profits [think I’ve got that right]

Question is does the calculation for whether you’ve hit the higher rate tax threshold take into account the gross salary or the gross taxable salary?

She pays into pension, share schemes and child care stuff too, so for arguments sake her taxable salary could be down to £32k, so theoretically I could be awarding £10k of Ltd profits?

I would ask the accountant but he’s on holiday for two weeks )

[ASB]

The proportion has to be in accordance with the shareholding of course and you need to be unconcerned about ir35 and income splitting.

A decent way of working out is to do dummy tax returns and not submit based on your own actual circumstances.

The 5k dividend allowance may help a bit.

[northernladuk]

Surely you've got to be careful buggering around with your company set up just to suit a short term tax situation? Changing your set up too often could attract unwanted attention, particularly if you changing, make a saving on a bunch of tax and then change it back again. If you are going to add someone you could do with keeping the situation the same for awhile which could mean you end up paying more tax next year when you are having to divi out when you don't need it and it's inefficient. I'd say you need to do some longer term planning.

It's unfortunate your accountant is on holiday but this isn't something I'd even be considering without some careful tax planning and a good long chat with my accountant.

[filthy1980]

Surely you've got to be careful buggering around with your company set up just to suit a short term tax situation? Changing your set up too often could attract unwanted attention, particularly if you changing, make a saving on a bunch of tax and then change it back again. If you are going to add someone you could do with keeping the situation the same for awhile which could mean you end up paying more tax next year when you are having to divi out when you don't need it and it's inefficient. I'd say you need to do some longer term planning.

It's unfortunate your accountant is on holiday but this isn't something I'd even be considering without some careful tax planning and a good long chat with my accountant.

wasn't planning on reverting the change in shareholding but agree need to work out what the longer term implications are as well as appotioning the share correctly