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Ltd Company, Partnership?

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    Ltd Company, Partnership?

    Hi all,

    Been a reader for a long time but not a poster!

    I'm looking for some ltd company advice.

    I'm contracting through my own ltd (outside IR35), paying myself £850 salary a month and taking dividends every 4-6 months. My girlfriend is moving from umbrella to ltd (also outside IR35) and I was wondering if instead of her setting up her own ltd she could have her earnings payed into my ltd company?

    I figure there's a few options.

    1. Keep me as the only employee, have her as a shareholder, and pay her out of dividends only (probably not tax man friendly).

    2. Add her in as an employee of the company, pay her the same salary as myself and also add her as a shareholder (paying her dividends).

    3. Add her in as an employee of the company, pay her the same salary as myself but don't add her as a shareholder, instead just pay her the salary and I personally transfer some money into her personal account out of my (now extended) dividends.

    Or is it better she setup her own ltd?

    I also figured maybe having two employees / multiple contracts the company is less likely to be investigated by HMRC also..

    Opinions? :-)

    Thanks!

    Stuart.

    #2
    Stuart,

    Firstly, I'll have to make an assumption. Both you and your girlfirend will have income which exceeds the limit for higher tax.

    If this is the case then you should really set up a different class of shares and sell them just to her, then you can make different dividend payments to different classes of share, so that each of you can get rewarded different amounts depending on amounts billed.

    If you don't make her a director then she should be an employee,

    IANAA by the way
    this advice is worth what you have paid for it
    you may be better asking in the financial forum rather than the general forum.

    Comment


      #3
      Let her create her own separate LTD Co for a couple of reasons:
      • New income sharing legislation from HMRC may well mean the government tries to get any dividends paid to the lower earner classified as income earned by the higher earner resulting in an increased tax burden (Stupid badly though out laws that nobody knows how they are going to implement yet...)
      • If it all goes a bit Pete Tong and you break up you don't then have to fight over who owns what in the company.
      Generally speaking don't get yourself into financial arrangements with your girlfriend, it may seem like a great idea right now but a couple of years down the line it could end up being a whole load of tulip that you didnt want.

      Comment

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