advice on new Limited company

skyjumper

hi there,

started working under my own limited company. wife never worked - no N I no. i have appointed her as the secretary to the limited company and would like to pay her without incurring much tax on her salary. we have a 3 month old baby and OH not planning to woek for the next 2 years.

No comments on the work pls. i like someone to advice me what's the best way- tax efficient way to pay her for her work.

can i just pay some money every week for taking care of our baby- not sending to Day care for the time being, and also taking care of the account keeping of the company?/

any help appreciated

jackomdj

I am sure someone more knowledgeable that I will be along shortly but if you wife is receiving maternity allowance (think that is what you get when oyu don't work??) then she may not be due for it if you "employ" her before this runs out....

Someone will correct me if I am wrong!

Also your wife should have an NI number if she is british - again someone will correct me if I am wrong - but you get allocated one when you turn (I think) 16. Just comtact the IR or Social Security office they should be able to let you know.

Finally do you have an accountant? They should be able to best advise on the best way to pay her. I think technically you will just be paying her for the book keeping.

Hope this is of some help.

Nicky

skyjumper

thanks nicky for a speedy reply

no she's not british and no she is currently on NO benefits including maternity allowance and she has never worked in the UK before.
i work and keep our family going. needed to know if there was anyway we could mange some tax money as i'm in the high tax bracket and that's why decided to leave my regular job- started a limited company and wants to make some saving.
hope this clarifies some of ur q's Nicky

Little_Mama

Hi Skyjumper,

Best advice would be to see an accountant as the HMRC have proposals due out soon regarding Income Shifting.

A good explanation of what's afoot is on http://www.familybusinesstax.com/

Won't know what really happening until the budget, possibly, but the plan is that it's going to take effect from 6th April.

Good luck with the company.
LM

skyjumper

thanks Little mama

will check the site and also will speak to my accountant. i'm sure a few people would have some first hand experience with this- so i asked this question

thanks anyway

Cook_County

Firstly, does she have permission to work in the UK? If not employing her would be a criminal offence.

Secondly, you will need to pay commercial rate at least equl to the minimum wage for the hours specified in the employment contract you will draft.

Third, the income shifting rules come to mind.

I assume you are receiving child benefit?

NeilW

skyjumper wrote: »

hi there,

started working under my own limited company. wife never worked - no N I no. i have appointed her as the secretary to the limited company and would like to pay her without incurring much tax on her salary. we have a 3 month old baby and OH not planning to woek for the next 2 years.

I wouldn't do that at the moment. You are likely to fall foul of the new 'income shifting' legislation proposed in the next budget (which will effectively move anything you pay your spouse back onto your own tax bill) and believe me you really don't want to do that.

The best you can hope for going forward is get a quote for a third party to be secretary of your company and then pay your wife that amount. That payment would then be provably 'commercial' and fall outside the legislation.

NeilW

NeilW

Cook_County wrote: »

Secondly, you will need to pay commercial rate at least equl to the minimum wage for the hours specified in the employment contract you will draft.
quote]

No you don't. A company secretary is an office, not an employment. Like directors it is unlikely the minimum wage act will apply.

NeilW

chappers

NeilW is correct you can pay her at any rate but it must be a reasonable salary for the work she does i.e you couldn't pay her £50K for doing some filing work for you.If reasonable I would pay her definitely up to her personal allowance and you do the same everything else you take out should be in dividends and then this is only chargable as corporation tax (20% for under £300k profit)

CannyJock

chappers wrote: »

NeilW is correct you can pay her at any rate but it must be a reasonable salary for the work she does i.e you couldn't pay her £50K for doing some filing work for you.If reasonable I would pay her definitely up to her personal allowance and you do the same everything else you take out should be in dividends and then this is only chargable as corporation tax (20% for under £300k profit)

Totally agree with Chappers here, if you're both shareholders in the company then you can both get dividends up to the higher rate tax bracket at a reduced tax rate.

Cook_County

CannyJock wrote: »

Totally agree with Chappers here, if you're both shareholders in the company then you can both get dividends up to the higher rate tax bracket at a reduced tax rate.

The income shifting proposed legislation will make this impossible from 6 April.