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Directory limited company and full time employment

Full time employment plus director of ltd company need advice

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Hi

I have full time employment above 70k and pay 40% tax. Recently i started working as contractor and setup a limited company with me and wife as director of the company.  I am thinking to pay my wife minimum wage to pay 0 ni and 0 tax. She looks after the admin side of business.  My question is around dividend or how to be tax efficient  as things gets complicated because of my other job.

My contract is around 100k.

So if i pay my wife 8840 a year and around 5k in expenses. 100k-8840-5 = 91155

Pay 19perc co opeartion tax on above

73835. How would more do i need to pay to take the above money out. I do have accountant hired recently and the suggestion is to split the shares, e.g give more to my wife so she only pays 7.1perc for 32500 dividend

Currently the share split is 1:1

And if i take 50 perc of 32k tjen i have to pay 32perc tax on 16k.

 

Please can someone guide on this. How to approch this scenario?

 

Replies (19)

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By David Ex
29th Nov 2021 20:30

Sk321 wrote:

I do have accountant hired recently

Please can someone guide on this. How to approch this scenario?

 

Use the accountant you are paying for. If he/she hasn’t explained things to your satisfaction, ask them again - and again, if necessary - until you do understand.

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Replying to David Ex:
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By Leywood
29th Nov 2021 20:20

+1

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Replying to David Ex:
By williams lester accountants
30th Nov 2021 07:32

+1

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By Sk321
29th Nov 2021 20:43

I wanted to get a second opinion. If someone can shed some light on this scenario

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Replying to Sk321:
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By David Ex
29th Nov 2021 21:05

Sk321 wrote:

I wanted to get a second opinion. If someone can shed some light on this scenario

If you want a second opinion then you need to pay for one. Giving professional advice on large amounts requires proper consideration of all your circumstances not just some selected facts in isolation.

It’s also not what this site is for.

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Replying to Sk321:
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By Leywood
29th Nov 2021 21:07

Pay for another accountant to give you the 2nd opinion.

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Replying to Sk321:
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By AndyC555
30th Nov 2021 09:07

Presumably you have a first opinion from your current accountant. Why do you doubt what you are being told and will this doubt apply to every bit of advice you get? If so, you should perhaps change accountants

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Replying to Sk321:
By Duggimon
30th Nov 2021 09:59

There's a range of options available to you, some will be more suitable than others, and which is best will depend on a number of factors which I would discuss with you were you my own client. You're not my client though, you're someone else's client and I have my own clients in similar situations who are paying me for the time it would take to answer your question.

You wouldn't hire a tradesman to do work for you then expect another one to come in for free and review or change his work, but that's what you're looking for here. If you're not happy with the accountant you engaged, engage a different one, or another one, but we're not going to compete for free with the one you're paying.

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Replying to Duggimon:
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By Sk321
30th Nov 2021 11:49

The energy you have put into writing that long msg was not needed. Thank you

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Replying to Sk321:
By Duggimon
30th Nov 2021 15:42

I assumed you wouldn't read it, you didn't read anything else on your way to posting.

I mostly write posts for my own cathartic enjoyment.

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By Paul Crowley
29th Nov 2021 20:46

An alternative is alphabet shares or dividend waivers
But make sure any waivers are done correctly

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By bernard michael
30th Nov 2021 09:10

Listen to your accountant. That's what you pay him for

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By bernard michael
30th Nov 2021 10:02

Does your wife claim child allowance ???

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Replying to bernard michael:
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By Sk321
30th Nov 2021 11:47

Yes she does claim child benefit which is 140 per month

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Replying to Sk321:
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By bernard michael
30th Nov 2021 12:11

Anybody want to follow up ??

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Replying to bernard michael:
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By HarryB
30th Nov 2021 12:27

I've stopped for lunch. I'll do it :)

Hi SK321,
Do you already submit an annual Tax Return? If your wife is claiming Child Benefit, and you earn £70k pa (excluding the divs from the company) then hopefully you are already paying the Child Benefit back by way of the High Income Child Benefit Charge?

To add to earlier comments - if you engage a professional on proper business terms you need to have confidence in the advice being provided. If, for some reason, you doubt their competency then you need to instruct someone else. A recommendation is a good starting point - not the cheapest person you can find.

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Replying to bernard michael:
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By Leywood
30th Nov 2021 12:44

so funny

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By williams lester accountants
30th Nov 2021 12:38

What is it you do in your 'contracting work'?

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paddle steamer
By DJKL
30th Nov 2021 12:44

Lots of things to consider, for instance would pension contributions re either yourself or yourself and spouse be worth considering?

You need to chat with a professional who can look at your overall family position and take into account your life goals etc, whether say pensions via company are clever, would deferred gratification by leaving company as a future income stream in retirement work?

Question 1 you should likely ask, do you need the extra money right now?

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