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Ask Your Own Question, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 5147
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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I am setting up a limited company in the which I estimate to

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I am setting up a limited company in the which I estimate to generate approximately £75,000 profits in year 1. For 2016/2017 I received a redundancy package from a previous employer which is sufficient for me to live on for the reminder of the tax year. I therefore do not need to receive an income from my new limited company although I understand it makes sense to at least take £5000 dividends as that will be tax free. If my husband also had shares, he too could receive the £5000 dividend and receive £5000 tax free. My husband however works and resides in Geneva, although he is a British citizen he is considered a non uk resident for uk tax purposes. Does this complicate matters? Could I perhaps also consider appointing him as a director and allocating a salary to utilize his personal allowance in the UK as this is unused.

Hello and welcome to JustAnswer. I am here to help you. I am reviewing your question and will respond to you shortly.

Thank you for your question.

There is no problem in both of your being shareholders of the company and then draw dividends out of profits.

As from 6 Apr 2016, there is no dividend tax credit. The dividends you draw are distribution of taxed profits in the company. You could both draw £5,000 each and not suffer any UK income tax.

Your husband would have to declare this investment income to the tax authorities where he resides and this income may become taxable there ..

As far as salary goes, if he is a sleeping director and does not take active part in the running/management of the organisation, HMRC may take a dim view of this. Moreover, he would have to declare this to local tax authorities (same as dividends).

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Hi there

Just checking to see if my responses to points raised in your question need further clarification.

Many thanks.

Customer: replied 1 year ago.
Sorry for the delay in replying - weekend and having young kids limits my time to respond! Yes thank you for this. I need to understand what the tax implications are in Geneva for my husband if any then.... I was only thinking of paying a nominal amount say 2-3k for fulfilling his director duties nothing more and understand the HMRC view comment. He has created my website too :-) Regarding shares and dividends, I have read that I could set the company up with different classes of shares. So ordinary shares perhaps 100% me and then a different class between me and my husband so we had the flexibility to vote just the 5k dividend each year if we wanted too.

Thank you for your reply.

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