Ex shows earnings of £100 per week
Options
Amara
Posts: 2,172 Forumite
Situation: ex runs his own limited company and pays himself £100 per week wages. CSA collects £15 per week for two children. In reality he earns at least £700 per week, rents a house £600 per month. What mother can do?
0
Comments
-
Not a lot but things are changing. Soon he will have to declare an income of at least the minimum wage. This is the Minimum Income floor for the self employed.
The problem with self employment and limited companies is that he can legally do things to avoid tax. Married men now with kids can do it also. It would be hard to have a rule whereby the only person in the country who cannot do it is a non resident parent as that would be unfair.
I suspect however that the government may do something in the future as Gingerbread is pushing for these ‘loopholes’ to be closed. Problem is they are not strictly loopholes but legal avoidance rules. Some of which actually help his business.
If he closes down his business you get nothing or £7 if he goes on JSA.0 -
Not a lot but things are changing. Soon he will have to declare an income of at least the minimum wage. This is the Minimum Income floor for the self employed.
The problem with self employment and limited companies is that he can legally do things to avoid tax. Married men now with kids can do it also. It would be hard to have a rule whereby the only person in the country who cannot do it is a non resident parent as that would be unfair.
I suspect however that the government may do something in the future as Gingerbread is pushing for these ‘loopholes’ to be closed. Problem is they are not strictly loopholes but legal avoidance rules. Some of which actually help his business.
If he closes down his business you get nothing or £7 if he goes on JSA.
Isn't that just the hourly rate though? SE doesn't mean 40hrs pwer week, he could do less than 16hrs if wished.0 -
For universal credit it has to be at least the equivalent of 35 hrs on the minimum wage if expected to work full time. CMS is likely to match this.
How and when this will be taken up by CMS I am not sure but it almost certainly will be as it is a step towards them paying more towards their children’s upkeep.
It is also a move towards getting them to pay more tax and probably NI. So HMRC will have a record which CMS will use.0 -
But. If they are not claiming universal credit does it still apply? Not 100% sure about that one yet as at the moment it seems more tied to UC.0
-
But. If they are not claiming universal credit does it still apply? Not 100% sure about that one yet as at the moment it seems more tied to UC.
Not sure what these credits are, but I do know I can get through a month on the figures the OP quotes and that includes leisure money and petrol.0 -
Unless and until CMS adopt it as policy for all self employed NRP’s it won’t affect very many at first.
If someone genuinely only earns £100 pwk and doesn’t claim benefits £15 per week is a lot to pay out.
Poverty won’t be solved by merely shifting it from one group or person to another. The £7-£100 starting threshold for paying is far too low and hasn’t changed for 19 years or so.0 -
Unless and until CMS adopt it as policy for all self employed NRP’s it won’t affect very many at first.
But he isnt 'Self Employed'. He is an employee of a company which is a legal entity in its own right. CMS cant do anything about it now and its highly unlikely they ever will be able to. To do so would mean changes in the law that would be so manifestly disproportionate or so dangerous for businesses in general they would never get through.
Company directors are exempt from minimum wage and a lot of other things. That may change but money wise its going to be a drop in the ocean since 'most' will already be paying themselves a low but livable wage. Actually i dont know why he is paying himself such a low amount. Thats below the NI threshold so he isnt doing himself any favors at all. He will be short of contributions and painting a big red target on his back for HMRC.
Another thing that is odd though is that if its only £100 per week then thats not going to be enough to live on so he must be taking the money out in another way. Normally that would be dividends but i thought CMS already had more powers than the CSA did on recovering money from dividend payments so it looks like there might be some other fiddle going on here. Might be worth you asking a few more questions.0 -
£100 is indeed very low.
You are right about limited companies and there doesn’t seem to be any plans in place to change that that I can see.
At the last Parliamentary committee on child maintenance there were references to self employment , evasion , avoidance. This was just prior to the election all part of a review into CMS
https://www.parliament.uk/business/committees/committees-a-z/commons-select/work-and-pensions-committee/news-parliament-2015/child-maintenance-report-published-16-17/0 -
His rent alone is more then £400. Mother believes he followed his accountant advice. It's really frustrating for her.But he isnt 'Self Employed'. He is an employee of a company which is a legal entity in its own right. CMS cant do anything about it now and its highly unlikely they ever will be able to. To do so would mean changes in the law that would be so manifestly disproportionate or so dangerous for businesses in general they would never get through.
Company directors are exempt from minimum wage and a lot of other things. That may change but money wise its going to be a drop in the ocean since 'most' will already be paying themselves a low but livable wage. Actually i dont know why he is paying himself such a low amount. Thats below the NI threshold so he isnt doing himself any favors at all. He will be short of contributions and painting a big red target on his back for HMRC.
Another thing that is odd though is that if its only £100 per week then thats not going to be enough to live on so he must be taking the money out in another way. Normally that would be dividends but i thought CMS already had more powers than the CSA did on recovering money from dividend payments so it looks like there might be some other fiddle going on here. Might be worth you asking a few more questions.0 -
Mother believes he followed his accountant advice. It's really frustrating for her.
Trust me. An accountant wouldnt advise that. The accountant would advise a salary that would require NI contributions. As it is he is doing himself out of contributions and making the company a target for HMRC.
This sounds like something he has done specifically to avoid CMS payments. Which is really dumb given the problems it may cause him longer term.0
This discussion has been closed.
Categories
- All Categories
- 343.2K Banking & Borrowing
- 250.1K Reduce Debt & Boost Income
- 449.7K Spending & Discounts
- 235.3K Work, Benefits & Business
- 608.1K Mortgages, Homes & Bills
- 173.1K Life & Family
- 247.9K Travel & Transport
- 1.5M Hobbies & Leisure
- 15.9K Discuss & Feedback
- 15.1K Coronavirus Support Boards