My wife and I co-owned a company jointly for many years but now we are getting divorced. I do most of the work and my wife is the main carer for the children. It’s a small service company, no employees, and goodwill largely personal to me. Are there any drawbacks for my wife to receive ongoing dividends from the company so as to use up her basic rate personal allowance instead of a full maintenance payment?  If there are what are they please?

HMRC are not happy about such an arrangement where the non-working spouse receives tax-free dividends (i.e. up to the income tax higher rate threshold). However in the ‘Arctic Systems’ case a few years ago HMRC lost in the courts in their attempt to prevent it. Since then they have threatened to change the rules, but it has not actually happened. So for the moment you can continue to pay your wife/former wife dividends. In respect of maintenance, if one spouse was born before 6 April 1935 there is tax relief for the payments, but otherwise not. All maintenance payments received are free of tax. Maybe the dividend route is preferable, because maintenance payments will come out of your after-tax income.