So I have been freelance for a year and my husband recently decided to set up his own business and work from home too. To help make this more manageable for us as a family I’ve taken on more clients and now earn enough to pay the bills and cover the household running costs - however once tax is taken into account I can no longer afford that. This is me working a 45 hour week so there isn’t a lot of flexibility on this.
I’ve always kept myself below the tax threshold but since I’m the one with established clients it made sense for me to be the leaning post for a while and once my husband’s business is established then anything he earns will be all the good bits.
He is going to set me up as a 50% shareholder (since my work will crossover into his and it makes sense for me to be company secretary) and we’ll both be paid dividends at 7.5% tax over and above our personal allowance. Can I transfer 50% of my income to him from my work account each month so that the household bills are covered under our personal allowances? This seems to be the most reliable income stream we have (I get paid by the hour, he works on commission). I know this probably sounds really dodgy but it’s a question I have to ask.
If this were allowed then we’d both pay tax on the dividends from month 2-3 of the business (taking into account the dividend allowance) and he would also pay corporation tax on business profits. If it wasn’t then I suppose we’d have to keep the dividends back to pay my tax bill at the end of the year - just trying to plan ahead and find out what is acceptable when you take the whole family earnings into account.
Thanks for your help!
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