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Need second opinion: tax on income of kids
heleen
Posts: 116 Forumite
in Cutting tax
Hi
I have had differing advice from my IFA and accoutant and thought I would turn to the experts on here.
I own a business (just me, consulting) and pay myself a small salary and the rest in dividends.
I am thinking of ways to tax effectively save for school fees for my kids.
One idea was to give shares in my company to a trust for the kids. I understand that I will have to pay CGT on that gift, and that I need to live for another 7 years for tha tgift to be tax exempt.
However, this is where my advisers disagree: one say tehre is no point because I would need to pay tax on any income that the trust would receive, i.e. dividends from my company,over £100 becasue it would be seen as my money. The other says that as it is a trust and does not go straiight to them, the income goes to the trust.
Who is right? Anythign else I should look out for?
Do you think I can just call the inland revenue with this question?
Heleen
I have had differing advice from my IFA and accoutant and thought I would turn to the experts on here.
I own a business (just me, consulting) and pay myself a small salary and the rest in dividends.
I am thinking of ways to tax effectively save for school fees for my kids.
One idea was to give shares in my company to a trust for the kids. I understand that I will have to pay CGT on that gift, and that I need to live for another 7 years for tha tgift to be tax exempt.
However, this is where my advisers disagree: one say tehre is no point because I would need to pay tax on any income that the trust would receive, i.e. dividends from my company,over £100 becasue it would be seen as my money. The other says that as it is a trust and does not go straiight to them, the income goes to the trust.
Who is right? Anythign else I should look out for?
Do you think I can just call the inland revenue with this question?
Heleen
I love it when a plan comes together :rotfl:
0
Comments
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Can you employ your kids and let them pay their own school fees?I'm a Forum Ambassador on the housing, mortgages & student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.0
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Employing the kids - now there's an idea! BRilliant.
Is it legal? I mean, what age do they have to be to be allowed to earn say £500/ month wihtout child labour laws coming into effect?
The kids don't have my last name, but their date of birth would be on the payroll which I guess goes to HMRC.I love it when a plan comes together :rotfl:0
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