Is your boyfriend a higher rate taxpayer? If he is, it will lower his income if his Company pays some dividends to you. It might then save him a significant amount of tax (32.5% on some of his dividends) whilst giving you a small amount of tax to pay (7.5% on some of your dividends).
Here are a few things to understand:
Firstly, being a Shareholder is not the same as being a Director. A Shareholder has no responsibility for the Company – unlike a Director who has many legal duties.
Secondly, your boyfriend must actually pay you your share of the dividends (into your bank from his Company account). Paying him the money straight back is not an option, nor can he do it as just a bookkeeping entry because HMRC could tax him on your dividends.
Finally, he should consider the Market Value of the shares in case there is a Capital Gains Tax issue (but this seems unlikely).
The basic 24 month rule applies – if you are an employee or director and work, or know you will work, at a temporary workplace for 40% plus of your working hours for over 24 months - you are caught by the ‘24 month rule’ and can no longer get tax relief on related travel, accommodation and subsistence costs. And you only reset the ‘24 month rule’ clock if you take a long break from the site or move to another site (see HMRC online booklet 490). So, if you get a temporary contract overseas, and you aren’t caught by the ’24 month rule, you can claim tax relief on the cost of travelling both to and from the overseas site; plus accommodation and subsistence costs while working overseas.
But there are other rules – known as ‘special rules’ – that apply to UK employees based overseas and consequently, even if you are caught by the ’24 month rule’, you are still entitled to tax relief on the cost of journeys to and from the overseas site; plus accommodation and subsistence costs where the employer (your company) pays for it, or reimburses you. And, either way, if you are based overseas for 60 days or more, you can also claim for the cost of two return journeys per tax year for your spouse and children. So it’s a bit like ‘heads you win; tails HMRC lose’!
Example: John has a Limited Company, he obtains a contract in Toulon for 18 months and claims tax relief on his travel, subsistence and accommodation costs – including coming home twice a month at weekends. He can claim for all of his travel, accommodation and subsistence costs he incurs – including the weekend flights. If his 18 month contract is then extended by 9 months, he then becomes caught by the ’24 month rule’ – but he can still claim for the weekend flights and the accommodation and subsistence costs so long as the Company pay directly, or reimburse John, for the costs (and any director of their own Company would always ensure this happened).
The dangers of transferring a buy to let to a Limited Company and the effects of the ‘market value’ rules.
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There are potential problems – so do speak to a financial advisor.
Inheritance Tax (IHT)
Genuinely giving the house to your children, or selling it and giving them the cash, means that if you live on for 7 years, it will not be counted as part of your Estate for IHT. The amount brought into your estate is on a sliding scale and depends how near the 7 years limit you survive.
Avoiding nursing home costs
If you have capital above £23,250 you will have to pay for your own care. Below that, the Local Authority are, at least partly, responsible. If the Local Authority believes there was a deliberate attempt to avoid paying for your care by giving assets away then, in some cases they can recover money from the recipients.
The wide range of work covered by the Construction Industry Scheme (CIS) includes installing conservatories.
The rules say, if you pay your friends as employees, (deducting PAYE and National Insurance) you don’t need to register for the CIS scheme.
But, if you pay them as self-employed workers (not PAYE), then you must register as a contractor under the CIS rules. You will probably need to deduct 20% tax (depending on their CIS status) from what you pay them for labour, provide them with proper statements, send monthly returns to HMRC and keep proper records. And your friends should register as subcontractors under the CIS rules and obtain a form CIS 4(P).
The penalties for failing to comply with CIS regulations are very harsh so take advice now if you are in this position.