Payments made to Non Share holder

[jimtoole]

Dear Moderators,

Me and my wife we run a limited company that we opened in April 2015. Before that we were both working as self employed. The 100% share holder of the company is my wife and i am the Director, She has paid me £30170.00 in this current tax year with payment reference Salary for some payments and majority as Dividends. Now today we realized that we have made a mistake as I am not a shareholder I can not get dividends. She has paid herself 11000 in this year too.

No my question are:
1. What is the most tax efficient way to deal with the £30170 paid to me?
2.In the month of December 2015 a total of £11000 was paid to me due to Christmas etc is there a way I can return that money back to the Limited company saying that the payment was made in error.
3. I would like to become the 100% share holder and Director going forward as my wife is not ready to have this responsibility any more so how do we transfer Shares ASAP.
4. Comapny is VAT registered and is in my Wife name again so how do we go about it.

Waiting for your response.

Kind Regards,
Jim

[jpcentral]

It sounds as if you need professional help rather than trying to muddle through yourself.

1. Possibly treat it as dividends paid to your wife although that would put her over the higher rate threshold, although you could possibly treat part of it as a loan made to the director and repay it out of dividends early in the 2016/17 year. You definitely should take advice on this because it can become expensive if you get it wrong. A great deal is going to depend on what has been reported as salary to HMRC via the PAYE scheme which I assume has been set up with all of the relevant returns having been made

2. Pay it back in. There will then be two entries in the company's accounts - a payment to you as a loan and a refund of the loan. There are possibly some P11D tax issues but these will not be great. Of course, if it has been reported as salary to HMRC it won't be that easy

3. She needs to complete a share transfer form (readily available on the internet) and Companies House advised when the Annual Return is submitted. Not sure this is the most tax effective thing to do so take professional advice

4. If the company is VAT registered, the VAT registration is not (should not be) in your wife's name. The VAT registration should be in the name of the company

It doesn't sound as if you really know what you are doing. Get help before you end up in a real mess which will cost you more.

[section 44]

She has paid me £30170.00 in this current tax year with payment reference Salary for some payments and majority as Dividends.

Sounds like its all properly salary (employment income)

[bd6759]

Directors are only entitled to a salary if they have a contract of employment, or if the salary is approved by the shareholders. Since this was never intended to be a salary, it cannot be a salary.

It is a loan from the company and should be repaid.