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Child benefit

Child benefit

Hi all

It struck me tonight, whilst considering the position of one of my clients who has 4 children, that carefully planning of dividends will ensure he keeps his benefit in some years and loses it on others (he has a company with £200k reserves and traditionaly has drawn £44k and now and then an extra £50k

I was thinking, it may be worth voting dividends to take him up to £99.999 earnings this year, thus lose the child benefit between 07/01/13 and 05/04/13 (so only a quarter of the annual total) and then ensure he earns £49,999 for each of the next few years and then maybe, now and then exceed that to extract funds

Before I go through the exercise of considering further, does anyone else have any thoughts??

 Thanks all

TTFN, 31 TRs to go ...and counting !

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By redman7
25th Jan 2013 08:26

Agreed
Thats the way i would do it

Also pension contributions could be an option

There's a book from tax cafe covering this and also a chapter in their salary / dividends book

Presumably if there is a spouse you've considered them having some shareholding too if they don't already (settlement provisions to be considered)

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25th Jan 2013 09:07

However make sure you register for the benefit to maintain the wife's NIC record

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25th Jan 2013 10:23

Sounds like...

... a great idea. I'm glad I thought of it! :)

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25th Jan 2013 10:34

why not £50,000 income or £100,000 income?

why are you doing it like one of those shops, where every price has 99p added on at the end?

You are not going to pay the high income child benefit charge on income of £50,000.

 

 

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25th Jan 2013 15:36

Thanks all

His wife works (yes with 4 kids !!) very energetic lady - he has the easy life!

@Tony - indeed you are right £50k/£100k, I merely use £49,999 etc for dramatic impact - I would have made it £49,999.99 but HMRC would round it down!!!

 

 

 

 

 

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By mhtax
26th Jan 2013 18:21

@ Bernard

Home responsibilities Protection was removed when the qualifying period for pensions went down to 30 years so receipt of benefit does not now give any protection, unless it has been reintroduced now they are putting the period up again to 35.

 

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