Our client had for some time been working on a contract with many hours of overtime and wanted to bring his wife into the business both as a working employee and a shareholder, but didn’t know what the tax consequences would be or how to go about making the change.
We discussed with our client the options and agreed the best route would be for his wife to become the Company Secretary to take over the administrative duties of the company and in addition he would issue a new share in the company to his wife. His wife would also now become his business partner which he felt sure would help to develop the business.
To fit the company requirements we advised that each share should be a different class of share which would allow the director to decide how much dividend should be paid on each share. This had the additional benefit of providing a simple and tax efficient system of payments from the company and overall would save considerable tax.
The changeover required the company to change its Memorandum and Articles of association, to issue the new share and to put his wife on the payroll. We were able to complete all the required paperwork within two weeks and our client was assured that all the required compliance work had been properly done and his wife was able to start work for the company. The additional benefit of tax efficiency was much appreciated.
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