new to contracting, S660A

[MrsKay]

Good morning all,

I have landed with a 3 months rolling contract with a possibility of going permanenet after some time (not known at this stage)

I have set up a Ltd Co with only £2 capital, £1 to me, £1 to my husband. I am the only Director.

With this in mind, this company may only be active for 3 or 6 months.
My question is:
Do I have to start thinking about s660a? say increase capital, making my husband a director, etc

I am keen to increase share to split the shareholding to 7:3 or 8:2 because my husband earns more than £36K on his currently permanent job.

Appreciate if someone can shed some light on this.

Many thanks,
MrsKay

[Craig@Clarity]

It's worth thinking about doing it sooner rather than later. You'll need to think about ratio too and the possibility of your husband getting a pay rise and how that will affect his income if he had a 50:50 split, 70:30 split, 80:20 Split etc etc.

Based on a £36k salary for him and assuming you don't have any income just yet in this tax year, you'd probably want to consider at most a 80:20 split. Possibly 90:10. It's easy to increase the shareholding at Companies House online.

[MrsKay]

Thanks Clare@InTouch.

My husband actually earns more than 60K and he has a company car. I believe he does pay quite a lot of taxes at the moment. so I am going to reduce his shareholding to 10-20%.

My contract rate is £400/day as a Business Analyst. I have less than 2 years BA experience (no ISEB) so I considered this a rather good rate (?)

I want to be sure we will walk out of the other end being financially better off.

On a different note, I'd like to know if it is worth while hiring an accountant? I was really ambitious when I started with the process (since I am a qualified accountant myself) - I thought I could do all the bookkeeping and filing myself. But I was told that I won't have the time. Is this true?

Many thanks,
MrsKay

[Craig@Clarity]

If your husband earns £60k elsewhere then there's no advantage to having him as a shareholder since he'll be paying higher rate tax on any dividend he receives from your company.

[MrsKay]

If your husband earns £60k elsewhere then there's no advantage to having him as a shareholder since he'll be paying higher rate tax on any dividend he receives from your company.

Thanks Craig@InTouch, you have been most helpful.

A couple more questions:

Do I need a resolution for share transfer?

If I am the director/shareholder/secretary... is there any implication for this sort of company structure in terms of tax purposes?

Many thanks,
MrsKay

[Craig@Clarity]

It wouldn't hurt to have a written resolution in place for a share transfer but not it's not necessary. Here's a help link all about share capital http://www.companieshouse.gov.uk/about/pdf/gba6.pdf

If you're sole director/shareholder/secretary or not, there is no issues with the structure. In fact, you've got a quite common structure. Paying dividends to your husband is fine too but you may want to seek advice on the tax planning aspect of it all.

[Wanderer]

My husband actually earns more than 60K and he has a company car. I believe he does pay quite a lot of taxes at the moment. so I am going to reduce his shareholding to 10-20%.

As Craig@InTouch says, there is no advantage if your husband is already a higher rate tax payer. Give him his £1 back and tell him "You're Fired!".

My contract rate is £400/day as a Business Analyst.I want to be sure we will walk out of the other end being financially better off.

As you are both fairly high income earners you might want to consider retaining some money in your company to avoid paying higher rate tax on your dividends with a view to taking it out some time in the future. It's hard to say without knowing your personal circumstances in detail though.

On a different note, I'd like to know if it is worth while hiring an accountant? I was really ambitious when I started with the process (since I am a qualified accountant myself) - I thought I could do all the bookkeeping and filing myself. But I was told that I won't have the time. Is this true?

You have accounting experience but you've also asked some fairly entry level questions as far as taxation and company structure goes. I don't mean to cause offence by saying that - it's just that if you make a mistake now then you could be up being very costly in paying tax that you could potentially avoid. You've had some good advice from the forum but now is the time to engage a helpful accountant (perhaps even one who has advised you here ) for a detailed discussion of your tax affairs and trading structure.

[MrsKay]

You have accounting experience but you've also asked some fairly entry level questions as far as taxation and company structure goes. I don't mean to cause offence by saying that - it's just that if you make a mistake now then you could be up being very costly in paying tax that you could potentially avoid. You've had some good advice from the forum but now is the time to engage a helpful accountant (perhaps even one who has advised you here ) for a detailed discussion of your tax affairs and trading structure.

Thanks for the advice, Wanderer. I will go and find an accountant now.

[ratewhore]

I will go and find an accountant now.

Do a search of these boards and choose carefully.