Can My Wife Take Half My Limited Company

Introduction

At Towerstone Accountants we provide specialist limited company accountancy services for directors and owner managed businesses across the UK. We created this webpage for people running a company who want clear answers on tax, payroll, Companies House duties, and day to day compliance without jargon. Our aim is to help you understand your responsibilities, reduce the risk of penalties, and know when to get professional support.

This is a question I hear frequently, often asked in very different circumstances. Sometimes it comes from a place of sensible tax planning, sometimes from a desire to reflect joint effort in a business, and sometimes from concern about what happens if a relationship breaks down. Whatever the reason, the idea of a spouse taking half of a limited company is rarely as simple as people expect.

A limited company is not personal property in the same way a bank account or a car is. It has its own legal identity, its own ownership structure, and its own rules about how control and value are transferred. That does not mean your wife cannot own part of your company, but how it happens, what it means legally, and what the tax consequences are all matter a great deal.

In this article, I am going to explain in clear practical terms whether your wife can take half of your limited company, what “half” actually means in a company context, how shares work, when transfers are allowed, how tax planning fits in, and what happens in situations such as divorce. I will also cover the common mistakes I see and how to approach this properly from a UK legal and tax perspective.

What owning half of a limited company really means

When people say “half my limited company” they are usually talking about ownership rather than day to day control.

In a limited company, ownership is represented by shares. If you own all the shares, you own 100 percent of the company. If your wife owns half the shares, she owns 50 percent of the company.

Owning shares usually gives rights to:

• A share of profits through dividends
• A share of assets if the company is wound up
• Voting rights on company decisions

However, the exact rights depend on the type of shares issued and the company’s articles of association.

This is important because giving someone half the shares does not automatically mean equal control unless the shares carry equal voting rights.

How limited company ownership is recorded

Ownership of a limited company is formally recorded at Companies House.

The public register shows:

• Shareholders
• Number of shares held
• Type of shares

If your wife becomes a shareholder, this change must be properly documented and filed. It is not something that can be done informally or retrospectively without paperwork.

Can you simply give your wife half the company

In many cases, yes, you can transfer shares to your wife, but it must be done properly.

This usually involves:

• Agreeing the number and type of shares
• Completing a stock transfer form
• Updating the company’s share register
• Filing the change with Companies House

From a legal point of view, spouses are allowed to transfer shares between themselves. There is no general prohibition on this.

However, just because you can transfer shares does not mean it is always a good idea to do so without understanding the consequences.

Tax treatment of transferring shares to a spouse

One of the reasons this question comes up so often is tax planning.

In the UK, transfers of assets between spouses who are living together are usually treated as taking place at no gain and no loss for Capital Gains Tax purposes.

This means that if you give shares to your wife, there is usually no immediate Capital Gains Tax to pay at the point of transfer.

This favourable treatment is one of the reasons spousal share transfers are commonly used in family owned companies.

That said, this treatment only applies if you are married or in a civil partnership and living together at the time of transfer.

Using spousal share ownership for tax efficiency

Many owner managed companies involve both spouses, even if only one is actively involved in the business.

By giving your wife shares, you can potentially:

• Split dividend income between you
• Use both dividend allowances
• Use lower personal tax bands
• Reduce the overall household tax bill

This can be legitimate and effective tax planning when done correctly.

However, HMRC does look closely at arrangements that appear artificial or where shares are created solely to divert income without genuine ownership.

The settlements legislation and income shifting

This is an area that causes confusion and worry.

The settlements legislation is designed to prevent someone from giving away income while retaining control over the underlying asset.

In the context of spouses and limited companies, HMRC generally accepts outright gifts of ordinary shares between spouses, provided the shares carry real rights to income and capital.

If your wife genuinely owns the shares and can benefit from them, the dividends are usually taxed on her, not you.

Problems arise where:

• Shares have no real value
• Dividends are guaranteed regardless of performance
• Control is effectively retained by one spouse

This is why share structure and documentation matter.

Different classes of shares and what they mean

Not all shares are the same.

Companies can have different classes of shares with different rights. For example:

• Ordinary shares with full voting and dividend rights
• Alphabet shares with flexible dividend rights
• Non voting shares
• Growth shares

Some couples choose to issue different classes of shares to allow flexibility over dividends while maintaining control.

This can be useful, but it must be done carefully and for genuine commercial reasons. Poorly structured share classes are a common trigger for HMRC queries.

Does your wife have to work in the business

No, your wife does not have to work in the business to own shares.

Share ownership and employment are separate concepts.

However, if your wife is also paid a salary, that salary must reflect the work she actually does. Paying a spouse a salary for work not performed is not allowed and can be challenged.

Dividends, on the other hand, are paid to shareholders regardless of whether they work in the business.

What happens to control if your wife owns half

This is a point many people overlook.

If your wife owns 50 percent of the shares with equal voting rights, she has equal say in shareholder decisions. This can include:

• Appointing or removing directors
• Approving major transactions
• Decisions on winding up the company

In a healthy relationship, this may not feel like a concern. From a legal perspective, it is still a significant shift in control.

Some people prefer to transfer economic rights without giving up equal voting control, which is where share classes come into play.

Can your wife take half the company in a divorce

This is a very different situation, and one that needs to be addressed carefully.

In divorce proceedings, a limited company can be treated as a matrimonial asset, even if the shares are only in one spouse’s name.

The court looks at:

• The value of the company
• When it was formed
• How it was funded
• Each spouse’s contribution

Your wife does not automatically “take half” of the company, but the value of the company may be taken into account when dividing assets.

This can result in:

• A transfer of shares
• A cash settlement instead of shares
• Ongoing financial arrangements

Family law advice is essential in these situations, as the outcome depends on many factors.

Does your wife already have a claim even without shares

Yes, potentially.

Even if your wife does not legally own shares, the company may still be considered part of the marital assets.

This is one of the reasons I advise clients to think carefully about company structure and documentation from the outset, particularly where a business is expected to grow in value.

What about director roles and responsibilities

If your wife becomes a shareholder, she does not have to become a director.

Shareholders own the company, directors run it.

If she does become a director, she will take on legal duties and responsibilities, including:

• Filing obligations
• Acting in the best interests of the company
• Compliance with company law

Becoming a director should never be treated as a formality.

Common mistakes I see in practice

There are several recurring issues I see when spouses are involved in limited companies.

These include:

• Transferring shares without proper paperwork
• Creating share classes without understanding the consequences
• Paying dividends without sufficient profits
• Assuming marriage automatically gives ownership rights
• Mixing personal and company finances

Almost all of these problems are avoidable with proper advice.

When transferring shares makes sense

In my professional opinion, transferring shares to a spouse can make sense where:

• There is genuine joint ownership
• Tax efficiency is a goal
• The share structure reflects reality
• Both parties understand the implications

It should be a considered decision, not something done casually or purely on hearsay.

When it may not be a good idea

It may not be appropriate where:

• The relationship is unstable
• Control needs to remain clearly defined
• External investors are involved
• Future sale plans are unclear

Once shares are transferred, unwinding the position can be difficult and sometimes expensive.

How to approach this properly

If you are considering giving your wife half of your limited company, I always recommend the following steps:

• Clarify the objective, tax planning, ownership, or protection
• Review the existing share structure
• Take tax advice on the implications
• Document everything properly
• Update Companies House records promptly

Doing this properly protects both of you and the company.

The role of professional advice

This is an area where professional advice genuinely adds value.

An accountant can help with:

• Tax planning and dividend strategy
• Share valuation
• Structuring share classes

A solicitor can help with:

• Share transfer documentation
• Shareholder agreements
• Protecting interests on both sides

Trying to do this informally often creates problems that cost far more to fix later.

Final thoughts

So, can your wife take half of your limited company. Legally, yes, in many cases she can become a 50 percent shareholder. Tax wise, transfers between spouses are often favourable. Practically, it changes ownership, control, and future planning in ways that should not be underestimated.

In my experience, the best outcomes come when this decision is made deliberately, documented properly, and aligned with both personal and business goals. A limited company is a powerful structure, but it needs to be handled with care, particularly when family relationships and ownership are involved.

You may also find our guidance on What is a Director’s Loan Account and how does it work and how to pay yourself from a limited company helpful when exploring related limited company questions. For a broader overview of running and managing a company, you can visit our limited company hub.