I have a LTD company with my wife, for our BTL property.
I'm self employed and earn around £40k and she's full time employment on £75k per year.
Our BTL LTD company should make around £4.5k profit per year however we want to make it so any dividends we take out she's not getting taxed immediately at the higher rate.
Is there a way she can waive her rights to take dividends as a shareholder and instead I take it instead? Being that the money will end up in our joint account anyways, it doesn't really matter on our side, but for tax purposes is this allowed?
Hi GeorgePowerFinch1,
There’s some great advice here already, particularly around Alphabet shares as a way to manage dividend distribution. It’s a much simpler and safer solution than waiving dividends, which can easily catch HMRC’s attention – especially in situations like yours where the waived amount still benefits the person waiving (e.g., going into a joint account). HMRC may see this as a deliberate way to avoid tax, even if it’s not intended that way, so it’s best to avoid waivers altogether if possible.
What I think would really help you here is looking at the
long-term picture. It’s easy to get caught up in the immediate tax benefits of using a limited company – lower corporation tax, no CGT on personal gains – but there are some serious questions you’ll need to answer further down the line. For example, once the property is sold, the profits stay in the company. Extracting those funds as dividends or salary will mean further personal tax charges. This double layer of tax can sometimes eat into the savings you thought you’d made.
It’s also worth thinking about flexibility. Right now, you’re considering waiving dividends or restructuring shares to make the best of the tax situation, but what happens if your circumstances change? For example, if you decide to expand your property portfolio, a company might make sense for reinvestment purposes. But if you’re planning to treat this as a standalone investment or a source of personal income, it’s worth considering whether the company setup is adding unnecessary complexity.
One option you might not have considered is using a director’s loan. If the company doesn’t need to distribute all of its profits as dividends, you could potentially loan the surplus back to yourself. It’s not as straightforward as Alphabet shares or waivers, but with the right accounting, it can give you some flexibility in the short term while keeping funds within the company.
To really make the best decision, I’d recommend sitting down with a professional and having them model the numbers for both scenarios – keeping the property in the company versus holding it personally (perhaps as a joint ownership split between you and your wife). This would give you a clearer idea of the total tax impact over the long term, including what happens if you sell the property or wind up the company. It’s not just about reducing tax now; it’s about making sure your setup works for you five, ten, or even twenty years down the line.
At the end of the day, the right structure will depend on what you’re trying to achieve. If your focus is on building a portfolio and reinvesting profits, a company could work. But if it’s about income and simplicity, holding the property personally might be more efficient. The key is to balance flexibility with tax efficiency, and making a plan now will save you a lot of stress later.
Best wishes,
Aaran
