1 or 2 Ltd companies?


F

Fred

I am starting a partnership with a friend in the form of a Ltd company.
Given that we can be paid dividends at a lower rate of tax for the first
£10,000, is it worth splitting the business profits between two companies so
we can both make use of this first £10,000 dividend?

Or am I missing a vital point?
 
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P

Paul Garbett

Fred said:
I am starting a partnership with a friend in the form of a Ltd company.
Given that we can be paid dividends at a lower rate of tax for the first
£10,000, is it worth splitting the business profits between two companies so
we can both make use of this first £10,000 dividend?

Or am I missing a vital point?
The point you are missing is that the £10k threshold is shared between
related companies.
 
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F

Fred

Paul Garbett said:
companies
The point you are missing is that the £10k threshold is shared between
related companies.
Many thanks - I wasn't sure on the definition of related and incorrectly
believed it referred to say husband and wife having their own Ltd company
for different customers and yet still "related companies".

Would this threshold also apply to one company which say does design and
manufacture and another which does sales and marketing for goods made by the
first company?
 

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