legal spouse for the contractor limited company

[jwan]

Hello, there.

I am told that to form a UK limited company for the contracting work is best way to go. And you can also appoint your spouse as a director or a shareholder of the company if you are married. I have a question on this. If the legal spouse is NON-UK resident, can he/she still be the shareholder of a UK limited company or just be hired as an employee of the company? Thanks a lot, guys!

[Louisa@InTouch]

Hi Jwan,

Yes, absolutely you can have shareholders and/or employees of the company that are not UK resident.

However you will need to establish their tax residency status in each tax year.

So, you would need to look at ties to the UK, days spent in the UK, etc, to determine if they will need to declare income in the UK and subject to UK taxes.

[northernladuk]

It sounds like you are just at the right point to appoint an accountant and start running it all through with them. They will advise you on all the legislation and tax issues. Points such as paying your wife for doing nothing for the company that could catch you out and so on.

It'll cost you around £120 a month for an accountant but if they do a good job they will pay for themselves in time, effort and mistakes. They will also probably offer a service to incorporate your company, set you up on FRS and a whole host of things you probably haven't realised yet.

Don't try to go alone, it's just not worth it.

[WordIsBond]

It sounds like you are just at the right point to appoint an accountant and start running it all through with them.

And if at all possible, try to find one who has at least some knowledge of your wife's tax situation re: the nation where she is legally resident. There are accountants who specialise in this, but they aren't necessarily specialists in contracting. So you might need to talk to one of the foreign specialists first and then use the information they give you in talking to your contracting accountant.

[northernladuk]

Is that a requirement? It is wife's problem where she pays her tax not the limited company's so unless the accountant is going to do her returns it doesn't matter. Would be good if he did know so he can answer the questions to help but once it's paid it's no concern of the accountants?

[WordIsBond]

Is that a requirement?

Not a requirement, I said "if possible."

How the limited company is structured could have significant ramifications for the wife's tax situation in her country of residence, which could undo or mitigate any benefit of having her own shares, etc. So it makes sense, if you can, to assess as many factors as possible. Wife's tax status is a factor on which he should get advice.

[northernladuk]

Ah yes. Didn't think that through very well did I. Thanks.

[WordIsBond]

Even YOU can't be expected to have thought through everything.

[jwan]

Thank you guys very much for your replies! I am indeed going through of getting an accountant to manage my limited company. But I think different accountant would give you different suggestions. It looks that I need to gather more opinions from different accountants. Can you guys recommend some who are good in this area please? Thanks!