dividends

[MrJuice]

Dividends are payable to shareholders, as we all know

What if I made my son a shareholder in my Ltd company that I own fully. Can he receive dividends without paying income tax?

Might be relevant that he's 14 weeks old...is there a minimum age before becoming a shareholder in a Ltd company?

[MrJuice]

I'm just looking at ways of drawing money down in the short term without paying additional tax

I know I can't pay him on PAYE until he can actually do something for the business. I'm guessing aged 14 would be reasonable for that. Again, a reasonable and not inflated rate of pay

I'd prefer to be able to use the money I draw as dividend on his behalf. But if it must go in a trust fund, then so be it. We've almost ruled out prep school for him. But could such a trust fund be used to pay his school fees?

[MrJuice]

You don't have to do anything for a company to earn a dividend if that's what the directors choose to do with company funds. Obviously, you need to be a shareholder to earn dividends

Son is 14 weeks. I can't pay him PAYE. I will pay him PAYE when he is 14 years. If I'm still I'm business and the business can afford that.

[MrJuice]

JPJPJP said:

are both you and the child's mother optimised for tax on money coming out of the company already?

Not really. I need to pay her a small salary and take dividends out for her. She's not yet a shareholder but I'll make her a shareholder soon

I'm looking forward a few years. Right not there's not much spare cash in the business. Bit there could be well into six figures spare cash in a few years that the business doesn't need as cash flow. So I want to make plans to use that surplus for non core activities and draw some down without paying yet more tax.

Interesting comment about setting up costs of trusts. How much do these things cost?

[MrJuice]

threesixty said:

I don't know, but I don't see why being a director is relevant in this situation, you don't need to be a director to be a shareholder and take a dividend.

I'd be extremely wary of giving children a shares at 14weeks old, who knows what the future may bring? I've seen no end of trouble caused from poorly distributed shares in family businesses.

I have and will always retain full control over the business, regardless of who owns it on paper. Maybe a bit of a brash statement but I do genuinely believe it to be true else I wouldn't be considering changing the ownership structure of my business which has taken a lot of time and effort to grow to what and where it is today