Does anyone have children as shareholders, where they receive dividends and this pays private school fees.
I have one client who had tried to pay school fees through his company as tax deductible!!!!! Now trying to pass shares to his children to save him tax and pay their school fees.
I see this as tax avoidance...am I correct?
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Due to
Tax anti-avoidance legislation re transfers to minor children being taxed on parents, this only works for gifts of shares by grandparents and is normally done via an IIP trust. Search this site for more info., but this may be less attractive going forward due to imminent changes to dividend tax rules.
Pay them a tax-deductible salary and let them pay their own bloody school fees. Screw tax law!
School fees
Pay them a tax-deductible salary and let them pay their own bloody school fees. Screw tax law!
Can that arrangement be attacked unless it can be demonstrated that they actually work for the company ?
Seriously?
Can that arrangement be attacked unless it can be demonstrated that they actually work for the company ? Pay them a tax-deductible salary and let them pay their own bloody school fees. Screw tax law!
Are you seriously suggesting that my little plan will not work? Send the little blighters up a chimney while they are small enough!
Seriously
Can that arrangement be attacked unless it can be demonstrated that they actually work for the company ? Pay them a tax-deductible salary and let them pay their own bloody school fees. Screw tax law!Are you seriously suggesting that my little plan will not work? Send the little blighters up a chimney while they are small enough!
Now why didn't I think of that !
.
Paying school fees via a limited company is not tax avoidance. It would be evasion if its just treated as a business expense, but if done properly it would also be a BIK, which would under almost any scenario be more tax to HMRC than taking dividends.
Ie more cash for the treasury, not less!
Hindsight is a wonderful thing but
really the answer is just to set every client up with a family company when they come to you and years later when they have grandchildren you will have the perfect structure in place.
No doubt I will get moaned at but I have some good guides on my site on this topic.
how about salary (if old enough) plus the 5k in dividends?
I presume the 5k under the new rules will not be assessed on the parent?
@neutru
Why would you assume that?
Salary - watch out for local child employment regulations.
Dividends - it is income, and over £100, so it is the parents income. Then you would look at how it was taxable.
If
They have no chimney etc., then there is no age or quantity limit for company secretaries, so you could perhaps consider that.
Has your client considered the possibility of purchasing the school? Then there would be no need for them to pay fees and they could be sent there for nothing without tax or NIC consequence.
School purchase
Has your client considered the possibility of purchasing the school? Then there would be no need for them to pay fees and they could be sent there for nothing without tax or NIC consequence.
As p*** taking goes this takes the biscuit
There would be a BIK, if you purchase the school
although no BIK if the director were to purchase as a sole trader, so perhaps incorporation relief is an added value service in this case.
Found this which gives some idea of salary levels for family members: http://www.dailymail.co.uk/news/article-2419462/Quarter-MPs-jobs-family-...
do remember Derek Conway (https://en.wikipedia.org/wiki/Derek_Conway ) his son turned out to be full time student.
It is surely more efficient to purchase children who have already been educated, thus avoiding the cost of having to school them at the client's expense. I have a couple of children who have now completed the entire education process at great expense and are now, frankly, just cluttering up the place. For only a nominal fee I would be happy to let your client take them off my hands, and he can simply donate his own unfinished ones to a favourite charity. The government used to provide workhouses to take in the overflow, but unfortunately with the cuts to welfare spending over recent decades the options are now much more limited.
A Modest Proposal
It is surely more efficient to purchase children who have already been educated, thus avoiding the cost of having to school them at the client's expense.
Presumably influenced and in the spirit of Swift's " A Modest Proposal"
Always knew studying literature at university would eventually have application to a career in accountancy but it has taken a fair number of years for the occasion to arise.
Masters of Malvern College Nichola?
Is one to understand Tim, that the children in question are too large to climb chimneys?
Too large for domestic chimneys certainly, but there should be no problem cleaning industrial chimneys or cooling towers. Just tie them to a bungee rope and push them off the top. Chim-chim-cheree.
Masters of Malvern College
Portia still a BIK, and can be rather expensive if your children want any extras.
Why not send the children off for apprenticeships instead? If you have an apprentice and you are a single director employee I am thinking that you may still get the ERs allowance for yourself.
What's with all the chat about b***** chimneys?
Surely this is the time of year for portly red-robed benefactors to descend chimneys, not for stuffing expensive posh kids up them!