Husband and wife own a company 55/45 in his favour. He is the fee earner but the wife does some admin. He's had enough dividends to use up his BR band this year. Wife has about £2k left but has also invested £5k in a SEIS. Hence, she needs some taxable income to utilise the 50% tax relief.
A dividend waiver would work as there are sufficient reserves to pay her the dividend she needs and leave funds equivalent to his waiver in the company. However, waivers are messy as you have to keep track of them and ensure the dividends he would have had are not inadvertently diverted to her in a future distribution. Not sure how long you have to do this for, but there must be a minimum period otherwise you could just get round it by declaring a second dividend straight afterwards.
My original idea was to allot her one B share for a special dividend, but although the share would have voting rights, it would only add 0.99% to her shareholding. I fear it might be vulnerable to a challenge as "substantially a right to income" as it wouldn't really confer much more in terms of ownership rights than she has now.
We could make it 10 shares, but that would give her control of the company which they don't want. Neither are they happy with a 50/50 or near 50/50 split, even though it would be an outright gift of ordinary shares.
I suggested B shares for him and C shares for her giving him control in line with his earning power whilst retaining the flexibility to vary the dividends. However, that means she'd have less voting power afterwards than she did before, which could be construed as the C shares being "wholly or substantially a right to income", thus negating the spouse gifts exemption.
Am I worrying about nothing here or could there be a problem? I always thought ordinary shares transferred between spouses without restrictions couldn't be caught by the settlements legislation, full stop, but when you look at the situation in the round, it doesn't seem so cut and dried.