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Partner to open our second Ltd Company

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We currently have a ltd company (making over £100k profit) and we are looking to open a second venture.

I currently earn £50k so keeping in basic tax (minimum salary + dividends @ 7.5%). My partner just takes a minimum £8784 salary to stay under income and NI threshold. So this gives us a joint income of £58,784.

I beleive that if my partner becomes a shareholder and earns dividends out of our current company, we will have to share the dividend amount so its not hugely beneficial to us (other than earning the 2k dividend allowance).

My question is: If we open this second ltd company idea, with my partner being the sole or main shareholder, will this allow her to be paid the 35k (ish) dividend (@7.5%) (giving her an income of £50k like me without going into higher rate tax). Which would make our joint income £100k, instead of £58k.

I hope I've explained well enough what I'm trying to acheive. We want to increase our joint income amount which a singular ltd company doesn't allow us to do without us going into the higher rate income tax band.

Thanks for your help.

Replies (15)

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By Paul Crowley
29th Nov 2020 14:49

Completely lost
Just own the share in in the first company jointly

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By frankfx
29th Nov 2020 16:43

Paul Crowley wrote:

Completely lost
Just own the share in in the first company jointly

Caveat:

As with the first-born in many cultures:

''According to the Companies Act, it is the first named (or senior) holder who has the right to vote at company meetings, appoint a proxy and sign any shareholders’ written resolutions.
The law does not give these same rights to other joint shareholders, partly to ease the administrative burden on companies''

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By Paul Crowley
29th Nov 2020 14:50

AL85 wrote:

We currently have a ltd company (making over £100k profit) and we are looking to open a second venture.

I currently earn £50k so keeping in basic tax (minimum salary + dividends @ 7.5%). My partner just takes a minimum £8784 salary to stay under income and NI threshold. So this gives us a joint income of £58,784.

I beleive that if my partner becomes a shareholder and earns dividends out of our current company, we will have to share the dividend amount so its not hugely beneficial to us (other than earning the 2k dividend allowance).

My question is: If we open this second ltd company idea, with my partner being the sole or main shareholder, will this allow her to be paid the 35k (ish) dividend (@7.5%) (giving her an income of £50k like me). Which would make our joint income £100k, instead of £58k.

I hope I've explained well enough what I'm trying to acheive. We want to increase our joint income amount which a singular ltd company doesn't allow us to do without us going into the higher rate income tax band.

Thanks for your help.

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RLI
By lionofludesch
29th Nov 2020 14:51

Sorry - share the dividend amount ?

Why's that ?

What does your accountant say ? Please - don't tell me you earn £100k+ and don't have one.

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Replying to lionofludesch:
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By Paul Crowley
29th Nov 2020 14:55

Based on question, definitely needs an accountant.

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By memyself-eye
29th Nov 2020 16:54

bet he/she doesn't have one...

I wager fifty pee

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By Wanderer
29th Nov 2020 14:53

Member Since: 29th Nov 2020

AL85

AL85 wrote:
Partner to open our second Ltd Company

We currently have a ltd company (making over £100k profit) and we are looking to open a second venture.

I currently earn £50k so keeping in basic tax (minimum salary + dividends @ 7.5%). My partner just takes a minimum £8784 salary to stay under income and NI threshold. So this gives us a joint income of £58,784.

I beleive that if my partner becomes a shareholder and earns dividends out of our current company, we will have to share the dividend amount so its not hugely beneficial to us (other than earning the 2k dividend allowance).

My question is: If we open this second ltd company idea, with my partner being the sole or main shareholder, will this allow her to be paid the 35k (ish) dividend (@7.5%) (giving her an income of £50k like me). Which would make our joint income £100k, instead of £58k.

I hope I've explained well enough what I'm trying to acheive. We want to increase our joint income amount which a singular ltd company doesn't allow us to do without us going into the higher rate income tax band.

Thanks for your help.

With circa £100k - £200k income it's best to talk this through with your accountants who will be able to take into account far more about both your personal circumstances than you have put in your post.
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By frankfx
29th Nov 2020 15:31

Some political correctness can cause confusion.
Partner.... is that partner
Spouse or civil partner

Speak to an accountant.
They will untangle the question and take you on the best path to meet your needs.

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Replying to frankfx:
RLI
By lionofludesch
29th Nov 2020 16:24

frankfx wrote:

Some political correctness can cause confusion.
Partner.... is that partner
Spouse or civil partner

Or live-in lover. Or bidey-in, as they say in Scotland.

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Replying to lionofludesch:
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By memyself-eye
29th Nov 2020 16:56

is that bidey as in 'biddy'

as in 'old biddy' ?

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Replying to memyself-eye:
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By lionofludesch
29th Nov 2020 17:04

memyself-eye wrote:

is that bidey as in 'biddy'

as in 'old biddy' ?

No. From the verb to bide. Or stay.

Although The Scotsman suspects a similar etymology.

https://www.scotsman.com/whats-on/arts-and-entertainment/scottish-word-d...

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By Sandnickel
29th Nov 2020 17:51

Tax is individual. If your partner takes £50k she/he will be taxed on £50k. What you earn is irrelevant.

The only relevance with dividends is how much profit is retained in the company. As long as there is enough profit for you both to take the amount to higher rate you are fine.

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By Calculatorboy
29th Nov 2020 23:09

Why open another company , you can have different dividend policy by having different share classes in same company ..get an accountant

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By Tax Dragon
30th Nov 2020 07:23

Just to warn you that if you act on any of the above responses (other than the obviously sensible suggestion that you engage an accountant), you will continue to fail to optimise your financials.

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By Duggimon
30th Nov 2020 10:21

I don't know what it is you've gotten wrong, but it's definitely something.

At £100K a year it's worth engaging a professional to find out what you've got wrong and fix it, preferably before you open a new and pointlesscompany.

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