Limited company ....am I going to have a problem?

[Cap_Scarlet]

My wife and I are both directors of our limited company.

The company has 3 shares. We each own one "A" share and additionally my wife owns a "B" share.

I am the sole fee earner and my wife does the books.

I don't take any money out of the company (I don't need it as I have income from other sources).

My wife takes:
- a salary (the minimum to get NI credit)
- a dividend. We only pay dividends on the B share.
- the company pays into her SIPP

Taking into account my income from other sources, my wife earns around half what I do.

Am I going to have a problem with HMRC?

[robbob]

the most obvious problem is the "commerciality" of the remuneration package for you spouse , you can only claim a corporation tax deduction for salary and pension payments that are reasonable for the duties performed. So you are fine paying your wife and adding to her pension from the company but to the extent that those payments exceed market rate for the duties she does there will be no corporation tax relief given which probably means that its not efficient to make those payments as planned.

Is there anything stop company adding to your pension instead of hers?

[Cap_Scarlet]

the most obvious problem is the "commerciality" of the remuneration package for you spouse , you can only claim a corporation tax deduction for salary and pension payments that are reasonable for the duties performed. So you are fine paying your wife and adding to her pension from the company but to the extent that those payments exceed market rate for the duties she does there will be no corporation tax relief given which probably means that its not efficient to make those payments as planned.

Is there anything stop company adding to your pension instead of hers?

Thanks.

I think the payments are reasonable (i.e. she does the books including tax returns), her earnings are the £8,500 salary plus £20,000 pension plus £15,000 dividend. The company has a gross turnover of £220,000.

I paid into my own pension outside of the company in order to get 40% tax relief.