Iain Rankin considers whether spousal (or civil partner) remuneration planning is affected by the spouse (or civil partner) also being a company director.
Many company directors choose to split dividends with their spouse. Married couples and couples in a civil partnership benefit from being exempt from the ‘settlements’ income tax anti-avoidance legislation, which was introduced in order to stop higher rate taxpayers benefiting from the tax allowance of a lower-earning family member or friend.
‘Settlements’ exception
The (in)famous Arctic Systems case (Jones v Garnett [2007] UKHL 35), a dispute between Geoff Jones, a limited company director who split company dividends with his wife Diana, and HMRC, was instrumental in clarifying the legislation surrounding dividend splitting between spouses. The key conclusion
