s660 Loophole

Answer to Roger at Egos re previous question.

No - I meant avoid s660 by reducing contracting effort and moving much of the company's capital into property management where the other spouse can be a primary contributor of effort.

Someone else owns the property before the company buys it. The company is then the purchasing entity using its own capital - not the directors. Afterwards the ensuing income release from rental is slower and more effort balanced between the spouses than further consulting alone. If anything the non-consulting spouse is likely to be the main property manager due to availability.

From your previous mail I think you are saying "Ah - but the consulting spouse earned the money that bought the property". My answer is that because that spouse never drew it as a dividend the money remains owned by the company entity and not the consulting director entity so it cannot be s660'd. s660 can only be applied at the point of withdrawal as a dividend, not on capital reserves within the company.

When the money has finally travelled the full course consulting-asset(house)-rental-dividend it has been reinvested and converted from one form of income to another.

As I said - the main drawbacks are that the company retains capital for large periods so if it DOES get sued limited liability isn't going to protect the fruits of your efforts. And of course companies also lack the CGT advantages that individuals have.

Slowing and regulating the financial output of the company by converting it to rental income is also a potentially good thing on a personal note as the company can then pay regular lower tax threshold dividends to both partners whether the consultant is working or not. At some point you get to retire but the company keeps on going, powered by the asset(s) alone.

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VXJK