Unsettled with DH’s disclosure of income

[ParisianLady]

I will firstly acknowledge that this is a good problem to have but it has been on my mind. I know I might get flamed but I can’t talk to anyone in real life about this.

Essentially I asked my DH the other day what he earned/made last year, and the answer was much higher than I expected. He doesn’t even know the exact number and went off to find out.

We have a really very nice life, 3 kids at private school, lovely house, lovely holidays where we fly premium or business, parties for friends and no money worries. I grew up in a more modest environment so this is wonderful and I know how lucky we are.

I work full time in a really stressful job for my own enjoyment but it is well paid and I enjoy having my ‘own’ money and sense of achievement. I do the usual frugal and sensible things like buy second hand school uniform, buy big packets of meat and split them, put the dishwasher on at night on the cheaper rate, shop of bargains. But I will fairly spend freely on things we need or just want.

My DH recently asked if I could pay for some building work, and when we needed a new car I bought it myself (and was proud and happy to do that). He’s generous but it felt fair for me to pay for these things myself.

Somehow if feels a dishonest by omission of him not to have said what his business was making. I knew it was successful but am just shocked. Not that it materially changes our nice life but why did I pay for the building work for example?

He isn’t hiding anything, he just didn’t think it was worth mentioning and I didn’t ask. But it just doesn’t sit right. Does anyone have any advice apart from ‘talk to him about it’. It’s made me re-evaluate lots of our recent decisions

I recently started a business. I don’t know what the turnover will be in future so I am not drawing any money out at all at this point! I’m building the company - it’s doing really well atm touch wood but there’ll no doubt be peaks and troughs. I am living frugally off money I saved from my previous job for next 2 years to do this and DH pension as he is older than me.
DH and I contribute equally to bills.
I’ve never thought to tell him how much the business is making - though like your DH I would if he asked - because it’s a bit meaningless as it doesn’t give a picture of how trading might pan out. I don’t tell him all the ins and outs because there’s no point - I have no idea how much actual profit after tax I might make at this stage - and it’s probably boring to discuss accounting!
What I would say is I’m working really hard at it and I appreciate his support. When you set up a business there is so much coming at you, that you really need your DP, DH or DW 💯 behind you if you are in a couple. I hope my company succeeds and gives us both a better life. I hope your DH’s does too.

It makes it common in that every small business I deal with has that as default, it costs nothing and is useful.

What the hell. Yes this needs ”flaming”

Theres nothing wrong with second-hand! As long as it’s not frayed/faded etc. it can be tricky to get good quality second hand kids clothes because of the nature of rough play etc. but then there is a lot only worn once due to them growing so quick.

What a silly, snobby attitude. And bad for the planet… great example for the kids. I’m glad mine have grown up going to the charity shop and learning not always to buy brand new.

A Bare Trust for that purpose, set up by parents? Very unlikely, grandparents totally, deed of variation, yes parents? Nah. Theoretical, but sort of thing talked about by providers are might get done once in a decade.
Discretionary, well you’d pay 20% tax on the excess over NRB. Not very likely is it?

More common than you seem to think, we have a family investment company - but I know some who have parental trusts (as opposed to gps).

It's not unusual for people with limited companies to earn dividends only. It does mean that you don't pay national insurance contributions and generally there is more tax free income. This is legitimate tax avoidance.

However, speaking as a retired limited company joint owner, I have always thought this strategy a bit risky. Yes we took dividends - up to the maximum tax free amount, but we paid ourselves salaries (we became employees of the company). We paid national insurance and tax on those salaries - and it was a lot! We felt that, as a business that emphasised its ethical credentials, we should pay our taxes and contributions.

Then covid came along. We were not able to work in the way we had and the company's income plummeted. Other company we owners we knew who had only taken dividends and director loans from their companies had real financial worries until things began to pick up again. We, as employees, were able to take advantage of the Government's covid support schemes - we were able to continue to pay ourselves salaries and the company remained solvent. Now retired, I receive full state pension because I continued to pay National Insurance. Should the business have collapsed, we would have been eligible for benefits in due course. This is a cautionary tale about paying taxes, even if you earn enough to avoid them legally.

That's probably what he's using to "top up her pension".

Yes, but at this point you don't have an established business that you're relying on to fund life for your family of five. And your husband is presumably not listed as a director? These are two totally different cases.

And good luck! I hope you have a flying success on your hands!

A FIC is not the same thing, and you know it. Just because you’ve been in a meeting and you ‘know someone, doesn’t make it a thing.

It is so interesting. I used to run the uniform sales at our private school before I went back to work full time. Everyone I know buys 2nd hand (otherwise all that outgrown uniform would end up in landfill), and the very fashion savvy teenage girls (including mine) are forever buying and selling on Vinted too.

I do understand, though, that if you’ve grown up only being able to wear 2nd hand/hand me downs, you will feel differently. I hope that will change.

A) it’s OP’s business as well (she’s a director of it)
B) it’s covering private and boarding school fees for 3 kids and business/first class holidays.

It seems to be doing okay.

Not clear why you’re being so obnoxious. I personally know people (ie close friends/family members) who have operated parental trusts, take it or leave it.

I’m being factual and correcting you, perhaps you’re not used to being wrong, perhaps that’s what’s obnoxious to you..

I was choosing to pull someone up who bandied around a reference to ‘Trusts’ like they are some magical solution, when clearly ‘knowing someone’ is vastly different to a suitable solution. Existing and suitability are miles apart. I run trusts for a living (ironically my kids have their own trust funds) and they are no magic bullet, in the circumstances the OP described they are very unlikely without other factors at play, not least because absolute entitlement, tax, and admin puts most parents off. As I say more a theoretical solution than one that gets deployed.

Totally agree, bizarre this is the one take away people are up in arms about, my kids are in private school, second hand uniform is a thing and my 8 year old is the 4th owner of his rugby top...the first went to uni last year 😂 its such good quality you would be crackers not to take advange of pre loved sales. I also get my eldest's named clothes off vinted, ebay, seasonal sales and my youngest has his hand me down wardrobe without issue. The saying if you look after the pennies the pounds look after themselves comes to mind

So you have a job, and earn good money, but expect him to pay for the lot? Why? Is it not both your money?

Director of the company but neither know how much it's taking? 🤣 just goes to show, you don't need to be clever to be rich.

You’re “correcting” something you have no knowledge of - which is trusts that were set up 20 odd years ago to pay school fees among certain of my acquaintance including family members.

When did I ever posit a trust as a “magic solution”? It was merely a passing comment that school fees may not come out of salary or company dividends, that was all.

That may well be unlikely in this circumstance, and OP certainly doesn’t mention it, but that’s a world away from “correcting” me on the circumstances of people you’ve never met.

Parental settlement, or an education trust 🤔 Whatever. A passing comment with ‘knowledge’ that is 20 years out of date, how useful

Your personal one off experience I have no knowledge of, but I can tell you Trust rules have changed, and so as I say, very unlikely. Which is totally my point. This post isn’t actually about you.

No indeed, these posts are all about you.

The trusts are extant… multiple children, set up before they started school… thus some at school some at uni.

I’d 100% be interested in an ama with you as a trusts professional with current knowledge

Rather unusual set-up. If you need a wealth manager I suggest you get to grips quickly as to what they are in fact managing... You need to sit down with the husband and clarify how much money you have and how you actually deal with it. If not for yourselves, then for your children to be able to plan their finances accordingly when the time comes, especially as they sound old enough to understand what's happening. If it's a family business, then even more so.

No, they are clearly about the technical aspects of trusts more widely, not just about someone I happen to know. Existing Trusts keep the legislative position of the relevant law in force at the time. New trusts are subject to new laws. There is no retrospective application. The registration of trusts that was most recently introduced included all existing Trusts. This is how the Westminster fortune is preserved, but it’s not something you could achieve today.

FWIW a discretionary trust is what you’re referring to here.

Anyway as you clearly can’t let it go, I shall bow out now.

@Justbloodydoit It’s very clear from this conversion who the aggressor is. This thread is not even about trusts.

he might not always know exactly how much he is making if he runs a business which is more complex. My husband is the same and only knows the total when it comes time to do his taxes. It sounds like your husband pays for most things so I don’t really know what the issue is here.

I really don't think that that's the case if you keep accurate accounts through the year. Even things like R and D tax credits should be being built into forecasts if they are applicable. I would say this is a key part of running a business.