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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

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

259 replies

bedknobs72 · 14/01/2019 13:44

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?

OP posts:
maddening · 14/01/2019 16:30

It should be paid as a couple out of wherever he pays his tax out of.

Walkingdeadfangirl · 14/01/2019 16:37

Sounds like this 'business' can't provide an income for 2 people. You can still help him with it but you need to get a job and let him keep the £300.

If he cant make it work and provide a decent income for himself, after 10 years, then its time for some home truths or you will both spend the rest of your lives in poverty.

Original poster
bedknobs72 · 14/01/2019 16:43

I really want DP to make a success of this - for his sake. I encouraged him to get some business coaching and he is starting to do things differently - I really hope it works out. He needs his confidence building but this tax thing has got me stressed as I don't have the money - presumed the £300 was my net disposable income.
Also when I say I get £300 from him - he physically pays it but it comes from ( or should come from) the business. I earn it. I used to help him out with Admin and marketing but I got so worried about how little we were getting in ( compared with what we need) that I effectively set up a new side to the business, acquired clients and do all the work for them ( he has no involvement with this) the invoices for this work I do get paid directly to the company. Only about £2k a month. Not much but I'm only working part-time and I started this new revenue stream from scratch. This is why he doesn't want me to leave. But I was only doing this to help him out and boost things a bit. He dealt with dividends and the accountant as it has always been his business. He said I could have £300 a month. When I do my tax return I just ask him how much I got in dividends ( apparently £20k)

OP posts:
Original poster
bedknobs72 · 14/01/2019 16:44

Yes, the fact that I am unmarried and don't have a pension ( we opted out of the pension scheme) makes me really worried. He doesn't need a pension as he knows he'll inherit money and he's got a property that was bought for him.

OP posts:
Ingurr · 14/01/2019 16:47

I don't understand this. £20,000 in dividends is a lot. If you each own 50% of the shares he must be getting the same so £40,000. The Company must be successful.

StatisticallyChallenged · 14/01/2019 16:52

It's a decent amount but if OP was previously earning well then it might not be enough to cover their outgoing

Original poster
bedknobs72 · 14/01/2019 16:57

@ingurr Yes I suppose the business is successful to a degree but £40k is not enough to cover the equivalent of two salaries in London or support a family of 5. We are obviously living way beyond our means and DP should never have said we could afford to have £300 a month out of his business as disposable income. However, if he had said this I would have insisted that I get another job as I actually need more than £300 a month to pay for pension, mobile phone, travel, savings etc. Sorry if that sounds bad, I know that lots of people live off a lot less than that. The trigger for this has been DP not putting money from the business aside for tax before deciding what we could each personally have. I never asked to be involved in his business but now I have to magic up over £1k for tax.

OP posts:
Walkingdeadfangirl · 14/01/2019 16:57

So the company is making at least £40k a year but he is having to pay his taxes out of savings and you dont have a pension? It doesn't make sense Confused

I really want DP to make a success of this - for his sake
“The definition of insanity is doing the same thing over and over again, but expecting different results”. Its been 10 years!

Original poster
bedknobs72 · 14/01/2019 16:59

@statisticallychallenged - yes I left a six figure job after my 3rd child. Would have had a breakdown if I'd stayed ( I was in a bad way) so there is another whole thing going on about giving up my independence and relying on DP and when I feel I can't 'rely' on him.....

OP posts:
HotSauceCommittee · 14/01/2019 17:00

“DP hit the roof”....”find a nicer way to tell him”....”Let me get a job”.
He doesn’t sound nice. I wouldn’t be having anymore children with him.

If you split, the business is his. You’d have nothing to show for ten years of not having enough money from his business.

howabout · 14/01/2019 17:02

Curiouser and curiouser. You both generate income from rental property and your DP has a family property gifted outright. The business generates £20k each in dividends and presumably a further £10k ish each in salary. Do you have a massive rent / mortgage on the property you actually live in?

Also reading your latest post, for a service business if you are generating £2k a month that equates to lost income of £24k if you
stop working for the business? Are you sure the business is collecting on all the invoices?

Original poster
bedknobs72 · 14/01/2019 17:03

@walkingdeadfangirl - I do have a pension, I pay it out fo the £300 a get out of the business as 'disposable' income.

I really want DP to make a success of this - for his sake
“The definition of insanity is doing the same thing over and over again, but expecting different results”. Its been 10 years!

And yes - I have tried to say that 'kindly' to DP and sometimes not so kindly. Like I said before though, he's taking a new approach now and there is a chance it could work - I should be supporting him and building up his confidence - but this tax issue has come up and really got to me!

OP posts:
HotSauceCommittee · 14/01/2019 17:03

“He needs his confidence building...” on what basis? I would say after ten years of being skint, any confidence in his business abilities would be vastly misplaced.
Are you scared to tell him “no” and resign from being a director in case he “hits the roof”?

StatisticallyChallenged · 14/01/2019 17:04

I can understand that - tbh it sounds like this just isn't going to work long term for you. It would be one thing if the business was growing well so the profits now didn't reflect the true picture but after 10 years I'm guessing that this isn't the case and it's probably going to stay fairly static without some big changes. And that's fine for him, but it's not going to make up for you losing income, pension etc

howabout · 14/01/2019 17:07

Were you really not in the pension scheme when you had your six figure salary? If you were and it was a typical 10% matched scheme then the accrued benefits may be such that scrimping to add contributions now may not make much difference.

WhoKnewBeefStew · 14/01/2019 17:11

I think you need to have a proper look at this business you are now a director of. If he can’t afford the tax bill (which I presume he’d have had to pay anyway even without you becoming a director) then things aren’t going well. Unfortunately you now have a responsibility for this business as a director, and if things for Pete Tong you’ll also be liable and it could adversely affect you

WhoKnewBeefStew · 14/01/2019 17:11

Companies house on google and look at his last accounts submission for
Starters

HotSauceCommittee · 14/01/2019 17:16

You’re not married and do not own his company and he’s also going to get a large inheritance along the way. Would you marry to give you security? Do you want to marry him? Does he share with you?

ehohtinkywinky · 14/01/2019 17:22

I think you either work for the business and get paid from it (so yes, you need to pay tax) or you're a SAHM getting given an allowance from his personal bank account / the family account, in which case you obviously shouldn't pay tax and it shouldn't be coming via the business ... Dodgy as hell.

eggsandwich · 14/01/2019 17:23

Tell him you resign as director as you can no longer afford to continue doing that role.

LagunaBubbles · 14/01/2019 17:26

I think you have more of an issue than just who pays the bill

I would agree with this.

clarrylove · 14/01/2019 17:27

Can you get the company to pay your pension directly instead of your salary?
Reduces corporation tax and your own personal tax problem.

UpAndDown89 · 14/01/2019 17:28

So why don’t you just take the money from the joint account?

FevertreeLight · 14/01/2019 17:40

Sounds like a way to keep income below child benefit levels rather than to significantly reduce taxation. If he had £40,000 dividends plus salary (£8,000), plus a flat he would be over the limit. By splitting dividends he isn't?

mummymeister · 14/01/2019 17:43

But OP dividends of £20,000 don't add up to £300 a month that he gives you do they. £300 a month is £3600. Don't rely on his accountant, get your own.

I am really confused to be honest. in your last post you say you get £2K month in dividends from the business. so how come you cant manage to be a SAHM OP if you have £2,300 a month income plus the rent on the property you rent out plus his salary? Or is that you get in about £2K worth of business a month.

Look one of you needs to get a grip on this situation. he isn't going to so you have to. get your own independent accountant. get copies of the books and have an honest conversation with him about his hobby. its not a real business because it isn't growing and has been stagnant for 10 years. Yes, I am being brutal about it but he is just "playing shop" really isn't he? All this about rich parents is just a bit of red herring. if the two of you really are in a relationship and a partnership then sit down tonight with a sheet of paper and each of you write down what you earn, where you get it from and then look at what money goes where. Fiscally you are both a bit all over the shop and first off there needs to be some honesty and transparency to sort this out. You aren't married, you need to protect your financial position and you need to take responsibility to do that not let him tell you what figures to put in etc.

please sit down with him and start an honest conversation about this. your current arrangement is quite frankly detrimental to you and could put you in a terrible fiscal position down the line when he has folded the company, gone into debt, mortgaged your house or anything else.