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Sam
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divideds from legal entity March 15? tax efficiency?

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I finished an employed PAYE UK job/role in company "N Ltd" in July 2014 (taxable earning YTD £33.3k – P60 P45 etc etc) and then since Sept 2014 I have been a “Limited company contractor” billing a new company "B Ltd" work via my existing legal entity I have ("R Ltd" – online testing ). My company ("R Ltd") (hobby business owned years or so) has a small amount of other income from a few other small customers this year (£300 ish) and expenditure in the year on new website (£1200 ish), Google Adwords (“Marketing costs”), train fares etc etc. (this may bring more revenue than the number below from new customers by the end of March 15 if the investment was worthwhile? Lets see), it also has brought forward losses of £11k from set up time mostly. I loaned the company a £12k “directors loan” in prior years, which I have now repaid to me £10k this year since R Ltd had funds. To date I have not had the need to pull any other cash/income from this legal entity (R Ltd) and therefore it is just sitting there. The company has two directors and shareholders, my wife and I. My wife works PAYE in another company ("H Ltd") and earns just under the 40% tax bracket (£32.7k)...how can I extract money from the "R Ltd" legal entity in the most tax efficient way please...I expect to earn £55k revenue in R Ltd by end of March 2015 with expenses of circa £5k...so £50k to clear less any tax to pay? ....dividends to me and my wife in March 2015? More expenses in the R Ltd business? my wifes car? she needs a new car? "Use of home allowance"? not previously charged in previous years? more spend on 2 other website ideas I have Ltd £1,500 spend? I just thought my wife returned from a year long maternity leave 26th August 2014 so maybe she has 20% tax relief band free? (though can I justify paying my wife dividends from my income/wages – the lines are fuzzy as I have done core business activities (testing online Ltd) as well as other things while at B Ltd and my wife is company secretary? Would I be better leaving the money in if I can and bringing it out as capital gain in future and wife? I have claimed no benefits from the state (unemployed 1st July to 9th Sept 2014) and I have declared that we are not eligible benefits (we have 3 kids) if relevant (I thought I would stay in old job at the time)? 1.5 times innovation relief allowed website work etc? I spent £1300 on filing cabinets earlier in the year, part R Ltd papers part home paperwork – can I claim them in part or whole? I have claimed max 45p per mile travel to B Ltd. The sooner I can get money into my personal account the sooner I/we earn 2.69% mortgage interest relief may be a small consideration. Many thanks Paul H 07980 691915 *****@******.***

Submitted: 2 years ago.
Category: Tax
Expert:  Sam replied 2 years ago.

Thanks question
before I proceed can I clarify the position (as its very confusing with N R etc Ltd)
You
You were employed until July 2014
You became a director of a limited company as a contractor - may I ask what services/goods you supply though this company - is it in breach of the IR35 legislation? (which states were it not limited company would you in fact be an employee of the business that pays you, that you have just one "client"
You also have been a director with a limited company business that undertakes online testing and until not has been more of a hobby than a business but yet is now set to earn a much greater amount (and you are your wife are both directors and shareholders on this company)
You mention about innovation relief website work? What is this in relation to? Do you mean R % D relief, has HMRC agreed to this?
Where are each of these companies you are director of situated how often to do you attend each of the business premises and what involvement your wife has in the hobby business.
What money do you think are due? (I ask this in relation to the fact you state the sooner you get money into your personal account the better)
Also note there is no such relief as mortgage interest relief.
I just need to you simply advise what each company is what it traders in, when it began - the information you wish to know with each, and then additional questions in relation to expenses etc within each company format.
And the questions in relation to your wifes permission
Thanks
Sam
Customer: replied 2 years ago.

My answers in bold below...thanks

you said "You were employed until July 2014" I say "yes"
you said "You became a director of a limited company as a contractor" I say "I always was a director in this "hobby" company) - you say "may I ask what services/goods you supply though this company" I say "online testing services and advice on that" - is it in breach of the IR35 legislation? (which states were it not limited company would you in fact be an employee of the business that pays you, that you have just one "client" I say "I have 4 or 5 other clients but they spend very little at the moment, we hope to increase this along side the work I am doing "main client" - Finance and Human Resources professional work from me + a tiny bit of testing". The contract I have signed with B Ltd is tight in terms of I have the choice etc and I can do other work e.g. I was talking to potentially large other customer Ltd the other day?
You also have been a director with a limited company business that undertakes online testing (I say "same company just one") and until not has been more of a hobby than a business but yet is now set to earn a much greater amount (and you are your wife are both directors and shareholders on this company) "yes - when I say hobby I really worked hard on it being a profitable business in my spare time but could not give it enough time and attention to become profitable - it is not a hobby really"

You mention about innovation relief website work? What is this in relation to? Do you mean R % D relief, has HMRC agreed to this? Sorry yes I guess that is what I mean - someone mentioned 1.5 times relief expenditure but I could be wrong? no not sought HMRC agreement yet as not finished the year (I forgot to say R Ltd has a year end of Dec each year so somewhat parts this income into two)

Where are each of these companies you are director of situated (I am only director in R Ltd based from home) how often to do you attend each of the business premises (in B Ltd - 4 or 5 days a week depends) a week and what involvement your wife has in the hobby business (only small amount of admin and Co sec duties on Friday each week)
What money do you think are due? (I ask this in relation to the fact you state the sooner you get money into your personal account the better)
Also note there is no such relief as mortgage interest relief (I have £22k in R Ltd bank, just raised £12k bill and expect to raise a bill for £11k ish and £11k ish )....all going in R Ltd

I just need to you simply advise what each company is what it traders in, when it began - the information you wish to know with each, and then additional questions in relation to expenses etc within each company format.

R Ltd (business I have owned years with my wife as co sec)...bills B Ltd services Finance and Human Resources professional expertise (system installs etc) + a small amount of testing online to help other B Ltd manages....no other relevant companies I guess?

And the questions in relation to your wifes permission (sorry not sure what you mean by this?)

Would it be easier if I called you maybe or is that not allowed?

Thanks

Paul

07980 691915

Expert:  Sam replied 2 years ago.

You can call me but I shall have to send the information through as an additional request and you will see this adds an additional charge on it, so it can be submitted - I have made this a low token amount (just so that the request can be sent through and this is call to take place now)
Thanks
Sam
Sam, Accountant
Category: Tax
Satisfied Customers: 13810
Experience: 26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
Sam and other Tax Specialists are ready to help you
Customer: replied 2 years ago.

Paid thanks just waiting ?

Expert:  Sam replied 2 years ago.
details below
Thanks
Sam

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