Dividend payment

[Breadfoam]

I’m currently a sahm but dh is a higher rate tax payer.
One of the companies he has shares in is due to pay a dividend of over £30k. He’s been told (by the company and by someone at hmrc) that he can pay the dividend to me and then I would declare it on a self assessment form (it would be the only income for that tax year) and he would not put it on his. So we would save about £10k tax.
This seems dodgy to me. Like tax avoidance dodgy. Hmrc sent a letter which said ‘the dividend can be paid in your wife’s name and she would declare it on her self assessment form.’

The shares are not in my name. The company regulations say the dividend can be paid to a person nominated by the share holder but does not mention the tax provision.

Any advice?

If HMRC have said word for word what you have quoted above then it seems fine to me

Get an accountant. That will stand against you for a very long time

Stand against me in what way?

Like I said, you need financial advice.

Yes - I was planning on phoning hmrc myself anyway to make absolutely sure that the above situation is legal.

It doesn’t seem like it can be - it is essentially using my tax allowance for a payment that is really dh’s...

Get tax advice but, tbh, if the company and someone at HMRC say its fine then it's probably fine. Tax avoidance isn't necessarily illegal.

That advice is most definitely wrong unless the shares are legally transferred first which I doubt they can be.

That’s what I thought IAm.
Dh is putting quite a bit of pressure on me as he wants to save the tax . I don’t think it can possibly be right.
I wouldn’t have a share certificate if asked by hmrc. The letter we had back from hmrc had spelling errors in it . I am concerned that the person we spoke to didn’t know what they are doing!!

I thought income can be passed between spouses. And tax free thresholds.

No - if you earn over the higher tax bracket none of my allowance can be passed over to dh.

Income only passes if the underlying asset passes first. If you try to pass just income it won’t work. HMRC have a lot of unqualified front line staff.

I’d have thought you’d need to transfer the shares into your name first

I agree Warsaw - transfer the shares into your name first & then it should be fine.

I once phoned HMRC about the same tax issue three times, and got three different answers! I think that you might be better off speaking to an accountant who specialises in this area and will have more detailed knowledge of the law.

Ok, sounds like we need to get a qualified accountant to look at this then.
I’d hoped HMRC would advise correctly, but maybe not. I must admit I lost faith after the spelling / grammatical error letter (lots of apostrophes in plural words).

Before jumping to transfer the shares check the board won’t veto the transfer or it triggers a disposal to another shareholder under pre-emotion rights. Those shares are worth money and there could be serious consequences of a transfer. You need professional advice not MN advice.

I'm a tax accountant OP. You can't do this unless husband transfers the shares to you before the dividend is declared. Dividends have to be paid in accordance with the shareholdings.

I totally rely on my accountant - there's so many ifs and buts with tax that it's best left to the professionals. Good luck!

The shares have to be owned by you for you to be taxed on the dividends. HMRC don't give tax planning advice, so the letter was either written by a HMRC employee who don't know what they're doing or is a forgery.

I'm with Poppet on this one (also an accountant). I agree with IAm's suggestion to check company rules round disposals, as if he is allowed to move them there isn't a capital gains risk (as you are his spouse) but you don't want the plan scuppered if the company has rights on his disposal of the shares.