Company car for the wife?

[zidan172]

Basically my wife is a 50% shareholder in my company. As a shareholder she is entitled to receive dividends but at present is not on the official payroll.

My question is that in this kind of setup, as she is not officially working for the company, would she still be entitled to a company car? Would it just be a case of her having to complete a P11d and submitting it along with all dividend declarations in her self assesment or would she have to be actually employed to have the use of a company car?

I'd welcome any advice from people with experience of this.

[Eric Mc]

Is she a Director or Secretary of the company?

She is certainly a Connected Person to a Director so I am pretty sure any car given to her by the company would fall under the normal BIK rules in any case.

[zidan172]

Yes, she's both a Director and Secretary..

[Eric Mc]

BIK will apply.

In fact, if you tried to prove to the Revenue that she was not officially working for the company, the Revenue could very well challenge her entitlement to any salaries or dividends that have been allocated to her. Although the Revenue lost the recent Arctic Systems case (which centered on a wife's entitlement to a dividend from a business essentially run 100% by her husband), they are planning on bringing in legislatiomn which should strengthen their hand when it comes to future related cases.

You never know, your company could be the next one to be looked at.

Edited by Eric Mc on Thursday 29th May 11:58

[zidan172]

Yes.. I don't see how the revenue can prove otherwise. I mean shareholders in any company can receive dividends without actually working for them. I have shares in loads of companies I don't actually work for! As you say though, it's something that the govt will no doubt look at in the future.

As far as the company car goes though it looks like she'll be fine as long as it's declared as BIK.

Thanks for the advice.

[Eric Mc]

zidan172 said:

Yes.. I don't see how the revenue can prove otherwise. I mean shareholders in any company can receive dividends without actually working for them. I have shares in loads of companies I don't actually work for! As you say though, it's something that the govt will no doubt look at in the future.

As far as the company car goes though it looks like she'll be fine as long as it's declared as BIK.

Thanks for the advice.

They had intended to bring in revised legislation at this year's budgetr. They have deferred these new laws until next year. The Revenue want to differentiate between dividend treatment in small owner-managed companies and larger companies as they feel the tax rules on dividends are being abused (I wonder where they got that idea from?).

[zidan172]

With everything that's going on with the economy at the moment I think they've probably got bigger fish to fry. Let's hope they get kicked out before these plans come to fruition!