AIBU to expect DP to cover the extra personal tax I'm liable for after become a 'director' of his company??

[bedknobs72]

I'm a SAHM.
DP gives me £300 a month for personal expenses and I get a little income from my old flat that I rent out. DP has a small business and has made me a co director as he said it would be more tax efficient. There is a joint account for big family expenses

I always do a Self-Assessment because of the rental income. However, now that DP has made me a director of his company I have to declare my 'earnings' and the dividends that I 'get' from his business. This means my tax bill is twice as much. I'm happy to pay the tax owed for the flat income as I had factored that in and put it aside from the flat income. But I sort of think DP should be paying the excess that I am now due because I've been put down as a director of his business? AIBU? DP certainly things so. He hit the roof when I suggested it seemed unfair and said that if 'he' paid for it I would be getting more money than him as he also only has a about £300 a month left over for personal expenses.

Still seems not quite right to me though. I agreed to being Director as I thought it would bring the overall tax bill for the business/him down. I didn't think I would start having to pay tax on the money I was suddenly 'earning' . I have had no change in the monthly money I get and I don't have any more for the increased tax bill.

I said to DP that if he had a job rather than owned a business ( and brought in the equivalent amount of money) he wouldn't be expecting me to give him half of his PAYE tax figure.

DP is getting very angry that I'm even suggesting that this seems unfair.

AIBU??

I genuinely don't know if I'm being a selfish unreasonable cow or if I have a point?

Sorry but having read this from start to finish one of you needs to get a paid job. It should be your DP as he appears to be unable to handle the technical aspects of self employment, additionally not that good at generating revenue.

But as he won't then I think you should. You've got the capacity to earn well and wouldn't need to take such a highly paid stressful position as before. If DP won't do any childcare support then you just need to work round it whilst doing some deep thinking of what he's actually contributing to the household

OP - from your last post it appears that this business has no business plan, no cash flow plan, no marketing plan, no strategy. I will say it again - it is a hobby business. he is playing at it. because if he wasn't he would have all of these things in place with a growth strategy and you wouldn't be where you are now exactly where he was 10 years ago.

its madness to pay taxes out of savings and shows a complete lack of fiscal understanding on his part. time and again I see people who are very good at doing " a thing" they then set themselves up in business and whilst they are still good at doing "the thing" they have no idea how to run a business. This business is not sustainable. it really isn't. and now, you have been dragged into it and you are just being so naïve about where this leaves you as an unmarried mother of 3 its a bit staggering really. Stop trusting his accountant. get the facts for yourself. and still, you wont sit down with him and have complete financial transparency. I refer back to my previous post. sort this out or its the end of your relationship. maybe not today or tomorrow but it will put such a strain between you or he will do something so financially stupid that it will risk ruining you as well. He needs to stop his hobby, now, today and go and get a proper job and if he wants to keep doing his hobby business part time then you need a part time job and to split the child care 50/50.

I was wondering "gross of what" but thought I'd missed something in OP information!

Still not clear where your £300 pcm comes from
I don't think anybody really does - including the OP.
It would be much clearer if OP had a wage slip to rely on......

I assumed it comes from this alleged £8k a year wage she is being paid for the work she does for his company.
8k a year equates to roughly £600 a month, she gets half this because the rest he allegedly deducts for her share of the household bills etc.
So even though she is not legally eligible to pay tax on this wage she is being gaslighted into believing she does.
He's also now gaslighting her by saying the £300 she receives is a gross amount - so basically cut her wage in half!
He's getting away with it cos OP won't ask him to show her cold hard facts and numbers, or even question his gaslighting.

She's most likely due to pay tax on the 20k dividend - but can't because she physically does not receive this money.
He controls op's 20k, doesn't pay any tax due on it and allegedly it goes into the joint account for household bills - so apparently op's share of the joint bills costs 20k a year plus the £300 a month he deducts from her wage

It should in theory be very easy to manage

Business takes in money
Business pays all expenses including salaries through PAYE so it’s taxed at source
Business pays corporation tax and any vat etc due
Business shows profit
Directors take dividends
Directors set aside tax from those dividends to pay the eventual tax bill
Directors spend dividends

Op - it seems as though there is far too much mixing of personal and company money which is a massive red flag

It should go as outlined above. If once all that is done, your 2 salaries and post tax dividends aren’t enough to live on, then you have to a) cut back on household expenses and b) secure more income either through employment or bringing more revenue into the business.

I would also give serious consideration as to what is a household expense (mortgage, food, kids piano lessons, party presents, hair cuts) and what is a personal expense (your nails, his golf, whatever). Because that £300 pocket money should really only be for the latter.

I would also seriously consider getting married.

Or leaving!

The 300 has nothing really to do with a wage. It’s what the ops dh says is left over each After bills etc. So salary or income from business minus all costs , bills etc gives them each 300 to spend. Except he forgot to take out tax and the business doesn’t actually generate enough profit for them to have 300. He’s not intentionally screwing her over but he is a bit clueless.

Paying corporation tax out of his own money and savings isn’t being clueless it’s being reckless or an idiot. Especially when they’ve got got an accountant who must have advised him

I’d be fucked off if an employer paying me my wage just gave me what I thought I’ve have left after I’d paid my bills then expected me to pay tax on the smaller amounts

I think the DP is getting a hard time here. A lot of people in a similar position would not volunteer to give 50% share of their business to their DP or provide them with an avenue for starting their own venture via the business - the Op admits to not being financially transparent wrt her own assets and investments. Op says she is generating £24k for the business and that she has scope to grow this either within the business or in a spin out. The DP also has plans in place to grow revenues. (For the Op to get a job she would need to replace the £24k with a much higher PAYE salary to take account of: higher tax liability, lack of ability to grow earnings, lack of flexibility, potential childcare costs. Would probably also make sense for her to give her shares back to her DP and he would manage his potential for breaching the higher rate tax bracket by keeping profits within the company)

If the Op is not upfront about her other sources of income then it is easy to see how her DP, acting on the advice of his accountant, would assume her tax liabilities were much lower than they actually are. However even then he should, at a bare minimum, be funding the tax arising were the business her only source of income.

On the issue of using personal money to pay the tax man, while I agree this is bad practice, it may be an issue of habitually drawing profits before they have turned into cash. From the DP's pov the business will eventually reimburse the tax bill when the invoices get paid. In contrast with pp my concern would be that the business may be growing too fast and that some of the new business invoices will not turn into cash.