Family company - what are pros/cons of all teh shares being with one partner versus equally divided?

[howdidthishappenthen]

Hi all - looking for a bit of legal/tax advice..

DH & I both work in a family business we set up together when newly married, but for historical reasons all the shares are owned by him.

I want to ask him to transfer 50% ownership to me - for personal credibility reasons in the business and to fairly recognise my role and contribution.

Are there any tax or legal implications of doing this? Any advantages we gain or lose if the company is jointly owned between two married partners rather than in his sole name? I want to know any side-implications of what I'm proposing before discussing it with him.

BTW no divorce or marital breakdown issues clouding the matter - so don't worry that you are stepping in an emotional mindfield here!

Hope someone can help.

I think that dividends are divided according to percent of shares owned, so if you pay yourselves a dividend you would get nothing unless you own shares. That may or may not be a good idea - for example, if you already earn money in another job and your oh does not, then you might find yourself pushed over a tax threshold when the dividend money was paid to you both, rather than just him.

I don't know of any legal implications - but I am not an expert of any kind!

If you both own shares you can both earn dividends, so you get to use up both tax allowances / lower rate tax bands.

We neither of us have any sources of income apart from the company.

Even if you did, one of you can sign a dividend waiver so that only the other one draws that dividend (we just did this with DH's company at the end of last financial year as I am on maternity leave so have virtually no income at the moment).

There are lots of tax and legal implications, far more than can be gone into here.

You certainly don't lose any advantages by splitting the ownership, so it is worth looking into, but to understand exactly what it will mean you will need to talk to your accountant together. If you don't currently use an accountant, there are probably loads of tax savings to be made .