New queries 8 June 2023

Child benefit claw-back when shareholding is unevenly split.

I act for a number of small family-owned companies. Typically the owners have children of school age and therefore are high income child benefit charge consideration apart eligible for child benefit. If the husband and wife both have adjusted net income of just under £50 000 there is no benefit claw back but if one spouse has adjusted net income of £60 000 and the other £40 000 all of the benefit is clawed back.

When the shareholding is 50-50 it is easy to ensure that the limit is not breached but often the shareholding is split 90-10 in favour of the husband.

What are readers’ views of dividend waivers by the husbands in these situations so that dividends of just under £50 000 can be paid to husband and wife. Is that acceptable tax planning...