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Taking Profits from a Ltd Company.

What is the most tax efficient way to split profits between 3 directors

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Client formed Limited Company with his two children.  They all put money into the company and purchased a house for renovation, with the idea to renovate and sell on for a profit.  House has now been sold.  The children wish to take their profits as dividends.  My client has now changed his mind regarding his share of the profits and would like to give them to his 3 grandchildren.  Only the youngest has any taxfree allowance available, the others are standard rate taxpayers, as is my client.
What is the easiest, most tax efficient way to do this?

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By Paul Crowley
08th Feb 2021 11:54

Companies do not usually make gifts, people do.

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Replying to Paul Crowley:
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By I'msorryIhaven'taclue
08th Feb 2021 12:07

So he either draws down his profit and gifts it to the grandkiddies, or gifts the grandkiddies his shares and lets them draw down the profit.

I know which is easier.

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By pauld
08th Feb 2021 11:55

As your profile name is 'the Accountant' what conclusions have you come you too so far?

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Replying to pauld:
A Putey FACA
By Arthur Putey
08th Feb 2021 14:03

Dang, you beat me to it.

Worst film ever, "The Accountant"

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By SXGuy
08th Feb 2021 12:07

If you already know all 3 directors sources of other income. What do You think is the most tax efficient way?

How are we to know the answer? It could be any number of answers depending on variable factors you don't mention.

They could be multi millionaires or on income support. They could be anyone and depending on who they are would depend on the answer.

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By The Accountant
08th Feb 2021 12:24

Sorry. Already came to the conclusion to take his profits then gift to the grandchildren. Just wondered if I was missing something. I have already told him several times, but he still keeps asking, so I thought I would give it a last shot to my esteemed contributors on here. Only my client is the millionaire. The two children are both working. The grandchildren, two are working and one is school age without income. I act only for my client and his wife, so do not know the income of the rest of his extended family.

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Replying to The Accountant:
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By Paul Crowley
08th Feb 2021 12:39

Still not enough
Millionaires do not always have high income
No idea of the profit or other dividends
If it is £6000 everyone could have it tax free if no other share income
or £12,000 divi half now and half in April for same result

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By Tax Dragon
08th Feb 2021 14:41

The Accountant wrote:

What is the easiest, most tax efficient way to do this?

Which do you want? Easiest, or most tax efficient?

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