Ltd Co, Trust Funds and School Fees - what's possible?

[4EverFlabbergasted]

I'm guessing the answer to this question is a big fat no. But I'm going to ask it anyway and hope a clever accountant type comes along soon.

DH and I are joint shareholders of a ltd co. No other shareholders.

I'm wondering, can we -

A) set up a Trust with our DCs as beneficiaries
B) gift that Trust non-voting shares of the ltd co
C) use the dividend income going in to the Trust to pay school fees?

Is this possible / legal? And if so, what would the tax implications be?

Wondering if the MNer accountants and IFAs are awake now??

Possibly, but the tax bill on dividends into a trust is 38.1%. You may be able to claim their allowances against this

However

Gifting into trust for the benefit of kids may also be a chargeable lifetime transfer. It may also trigger a CGT bill.

The tax rules are that its the spirit of the rules, not the letter. This is a tax dodge and defending it in court could be costly.

Thank you dont I thought they'd be a logical reason why everyone wasn't doing it!!

Back to the drawing board.

If you have a large enough lump sum investment (look at some calculators how best to structure this out of the business), then offshore investments can at least roll up tax free. You can allocate offshore bonds to the kids, who then encash in their name to save the tax. It's only really worth it where investments exceed ISA allowances etc, and can impact on pension planning now too, but as a director, you should have some good control.

School fees are a difficult bill to fulfill when you've been used to great tax efficiency out of a business.

I wonder if you could create non voting class of shares for the kids though. You could issue divis and face the usual tax bills, but at least have tax allowances used for the kids.

www.informdirect.co.uk/shares/can-a-child-own-shares/

If it was possible I'm sure my parents accountant would have the lad them. I work for their company & couldn't work out axway of paying school fees more efficiently.

When Dd goes into 6th form she will use her personal allowance working during holidays & weekends.