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Original poster

Limited Company

10 replies

CBradshaw · 12/04/2019 23:12

Husband and I have just separated - he has his own limited company of which I am a director/shareholder. I don't want to receive dividends any more as it will affect my universal credit. Should I remove myself as a director and/or shareholder? Will this affect anything I may be entitled to from the business when we divorce? (The business isn't worth much but has a steady turnover).

OP posts:

TalkinPaece · 13/04/2019 14:34

Do nothing at all in haste.
He can defer declaring dividends while you sort your separation finances.

jemihap · 13/04/2019 15:11

So you're looking to deliberately deprive yourself of an income so you sponge off the taxpayer instead?

Original poster

CBradshaw · 15/04/2019 23:24

I currently work but am eligible to some universal credit to help with cost of my house.

When dividends have been paid in the past, what was paid to me went back to husband to pay mortgage and bills etc. He will still expect the same so he can pay his bills and pay maintenance for the children. So money would appear as my income despite me not actually being able to keep it.

But I would like to still have an interest in the business for now without receiving money on husbands behalf, so that when we do divorce I'm aware of anything I may be entitled to.

OP posts:

kamelo · 16/04/2019 01:33

Without an in depth knowledge of how the business is set up it's impossible to say.
However, from what you have said it looks like in order to keep receiving universal credit you want to deprive yourself of money that's legally yours. If that is true then it stinks and hopefully you change your mind.

kamelo · 16/04/2019 01:40

Having re-read your post it gets even worse.
Why would he expect you to still contribute to his bills? They're his bills.
Who does he pay maintenace to, you?
Assuming you, you want your share to go to him so you can still claim benefits and then him to pay maintenance (the money that you gave to him) to you which is then disregarded for benefits.

Just wow.

Whywonttheyletmeusemyusername · 16/04/2019 01:43

I'm sure I read somewhere today that Dividends are not counted as Income....hopefully someone more knowledgeable can enlighten both of us

TalkinPaece · 16/04/2019 08:35

Dividends are most definitely income, just not “earned” income.

I can see a legal and moral way around the OPs problem.
Her hisband is using her shareholding to get double tax allowance.
She should ask to swap her shares to an other class that does not get dividends, but still has votes.
But
That will reduce the net income of the household and affect a divorce settlement.
She needs to talk to a lawyer.

Original poster

CBradshaw · 16/04/2019 23:58

My husband earns all the money for the business (I did some admin but not much). We were advised to both take dividends for tax reasons (I wasn't working at the time due to 2 small children to look after). Otherwise, all the money would have gone to him direct.

Now we have split and are living separately and therefore costs/bills etc are separated. I don't need/want any more dividends - but don't want to loose my rights to any profit I may be entitled to in a divorce.

I've spoken to a couple of lawyers and they were not able to advise me on this issue!

OP posts:

TalkinPaece · 17/04/2019 21:32

CBradshaw
Lawyers will be clueless as this is a tax planning issue
accountants are the way to go, but your DH's one will not be allowed to be friendly to you.
can you PM me the company number and when I get back from hols next week I'll send you some links

MODGNIK · 17/04/2019 22:50

You owning the shares was seemingly for tax avoidance- which isn't illegal.

He (or the company) or someone else could buy the shares back at the market price (hard to price). That is how you would get money from the business in the divorce (which would impact on UC) unless you retain the shares and keep taking dividends. If it is a small company basically he can just start working through another company and so the share value is often very little- especially in divorce. Or he could pay himself a larger salary so that there are less/no dividends- but he would pay more tax/NI that way. He can possibly make the business of which you own part worthless to share holders easily.

Seems a bit rich that you took the shares to reduce your family tax payments (so to pay less into the system) but now you want to get rid so that you can claim universal credit from the system that you didn't want to contribute to in the first place.

£2000 of dividends are tax free.

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