At which point is it worth having the wife as a Director?

[ChimpMaster]

If you start a limited company and want to use both your own and your wife's tax allowance, is it really worth having her as a Director if her income is already around the £20k mark?

Also, because both directors have equal shareholding, every time a dividend is paid then does it have to be paid to both directors equally?

I guess the cleanest route might be for the main earner to have a Ltd Co salary of £20k and the wife to have a £0 salary from the Ltd (so she only has her other £20k income). Then pay out dividends of approx £19k each (i.e. up to the 40% bracket).

[slackbloke]

If you start a limited company and want to use both your own and your wife's tax allowance, is it really worth having her as a Director if her income is already around the £20k mark?

Also, because both directors have equal shareholding, every time a dividend is paid then does it have to be paid to both directors equally?

I guess the cleanest route might be for the main earner to have a Ltd Co salary of £20k and the wife to have a £0 salary from the Ltd (so she only has her other £20k income). Then pay out dividends of approx £19k each (i.e. up to the 40% bracket).

It is not about being a director, it is about being a shareholder.
She doesn't need to be a director or an employee, she can be a shareholder and get paid a dividend.
Regarding the dividend payment, it should be paid equally per shareholder (so for equal shareholding both shareholders would get an equal dividend). You can get round this with a dividend waiver although it is questionable whether you would meet the criteria as you are likely to be doing it to avoid tax).
If you make your wife a director then she will have to complete SA.
But more importantly she will have a say in the running of the company. Avoid.

[ChimpMaster]

So she can be a sharedholder without being a director, and hence only has to report the dividend in her personal tax return. That sounds good.

Thanks for the info!

[NickNick]

Plus there is nothing stopping her from having more (or less) shares than other shareholders and therefore taking more (or less) of a dividend each time.

[Archangel]

Or the company having two classes of share which pay different levels of dividend

[Fred Bloggs]

For our Ltd Co we have a 60/40% share holding with wifey as Co Sec and also a Director. It works for us and keeps us both under the 40% income tax threshold. I also use a hefty monthly company contribution into my SIPP to reduce tax burden.

[dave20]

you should make her a shareholder only. Then before her earnings hit the high rate tax bracket (40,835 including tax free allowance) give the share back to the company. or transfer it to your pet goldfish.

[ChimpMaster]

For our Ltd Co we have a 60/40% share holding with wifey as Co Sec and also a Director. It works for us and keeps us both under the 40% income tax threshold. I also use a hefty monthly company contribution into my SIPP to reduce tax burden.

What advantage is there is having her as a director? I would have thought that it's just more hassle?

[sage@reillymcmordie]

wife as director

slackbloke's original response is correct. i would add that HMRC has yet to decide whether to challenge these arrangements as tax evasion. if they do - it might be retrospective. best advice is probably to give yourself a realistic salary (market value) and distribute any reserves in accordance with the dividend structure.

[Archangel]

What advantage is there is having her as a director? I would have thought that it's just more hassle?

No advantage whatsoever, nada zilch, don't do it.