- Original Poster
- #1
My wife and I set up a business together (a nursery/pre-school) as a Ltd company about 3 years ago. We are both directors but I am only involved minimally on the financial side and have nothing to do with managing the business or working at the school while my wife is the manager full-time.
We set up with a share split to give more flexibility on dividends (I work as a contractor through my own Ltd) - she has 50 class A shares and I have 50 class B shares.
This is the first year there has been any profit to consider small dividends but in an ideal world I would take none as my own Ltd already gets me up to the higher-tax threshold.
Separate share classes means IIRC we can do exactly that, issue a £5k dividend to class A shares only for example? But, before we do so I want to consider if this is deemed normal and above board by HMRC in our scenario or would be viewed as 'dodgy'? I know people have used "alphabet share" schemes in the past to circumvent income tax (10 'employees' each own 10 shares in class A, B, C... J and their 'salary' is issued as a dividend to their share class). We're clearly not doing that but we have structured the shareholdings to be more tax-efficient.
Does anyone have any thoughts on this? Is it the normal approach for a husband/wife business or frowned upon? Since we have taken no dividends we can amend it easily.
Thanks.
We set up with a share split to give more flexibility on dividends (I work as a contractor through my own Ltd) - she has 50 class A shares and I have 50 class B shares.
This is the first year there has been any profit to consider small dividends but in an ideal world I would take none as my own Ltd already gets me up to the higher-tax threshold.
Separate share classes means IIRC we can do exactly that, issue a £5k dividend to class A shares only for example? But, before we do so I want to consider if this is deemed normal and above board by HMRC in our scenario or would be viewed as 'dodgy'? I know people have used "alphabet share" schemes in the past to circumvent income tax (10 'employees' each own 10 shares in class A, B, C... J and their 'salary' is issued as a dividend to their share class). We're clearly not doing that but we have structured the shareholdings to be more tax-efficient.
Does anyone have any thoughts on this? Is it the normal approach for a husband/wife business or frowned upon? Since we have taken no dividends we can amend it easily.
Thanks.
