Afternoon all, my first post so hope somebody can advise!
I am in the process of gifting 20% of my company to a well deserving long serving collegue, along with a directorship (where I will remain as Chairman with the casting vote). This is also so he can obviously recieve 20% dividend share, with myself the remainder. I also would like to take advantage of paying our wages as dividends.
Now, say we both take 12k as a salary and top up our wages as dividends. He is at present on a wage of 26k so to top this up as dividends would require 14k, as my wage would also, before any lump sum dividends are distributed at year end. My question is, as those dividends are after corporation tax of 20% would that essentially being paid for by the company and a share of my dividend? It certainly is more than a 20% cut. Though he is contracted to recieve the 26k via payroll befor any dividend. What is the fairest way to all parties?
Thanks in advance!