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  • FIRST POST
    • Amara
    • By Amara 10th Jul 17, 6:33 PM
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    Amara
    Ex shows earnings of 100 per week
    • #1
    • 10th Jul 17, 6:33 PM
    Ex shows earnings of 100 per week 10th Jul 17 at 6:33 PM
    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?
    Tackle your debt, take a part in 1 debt vs 100 days challenge.
    1 debt vs 100 days challenge part 27
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Page 1
    • Sambella
    • By Sambella 11th Jul 17, 5:23 PM
    • 346 Posts
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    Sambella
    • #2
    • 11th Jul 17, 5:23 PM
    • #2
    • 11th Jul 17, 5:23 PM
    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.
    • DUTR
    • By DUTR 11th Jul 17, 10:21 PM
    • 11,027 Posts
    • 6,269 Thanks
    DUTR
    • #3
    • 11th Jul 17, 10:21 PM
    • #3
    • 11th Jul 17, 10:21 PM
    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.
    Originally posted by Sambella
    Isn't that just the hourly rate though? SE doesn't mean 40hrs pwer week, he could do less than 16hrs if wished.
    • Sambella
    • By Sambella 11th Jul 17, 10:46 PM
    • 346 Posts
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    Sambella
    • #4
    • 11th Jul 17, 10:46 PM
    • #4
    • 11th Jul 17, 10:46 PM
    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.
    • Sambella
    • By Sambella 11th Jul 17, 10:49 PM
    • 346 Posts
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    Sambella
    • #5
    • 11th Jul 17, 10:49 PM
    • #5
    • 11th Jul 17, 10:49 PM
    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.
    • DUTR
    • By DUTR 11th Jul 17, 11:23 PM
    • 11,027 Posts
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    DUTR
    • #6
    • 11th Jul 17, 11:23 PM
    • #6
    • 11th Jul 17, 11:23 PM
    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.
    Originally posted by Sambella
    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.
    • Sambella
    • By Sambella 12th Jul 17, 12:57 AM
    • 346 Posts
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    Sambella
    • #7
    • 12th Jul 17, 12:57 AM
    • #7
    • 12th Jul 17, 12:57 AM
    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.
    • MataNui
    • By MataNui 12th Jul 17, 3:30 PM
    • 853 Posts
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    MataNui
    • #8
    • 12th Jul 17, 3:30 PM
    • #8
    • 12th Jul 17, 3:30 PM
    Unless and until CMS adopt it as policy for all self employed NRPs it wont 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.
    • Sambella
    • By Sambella 12th Jul 17, 6:18 PM
    • 346 Posts
    • 322 Thanks
    Sambella
    • #9
    • 12th Jul 17, 6:18 PM
    • #9
    • 12th Jul 17, 6:18 PM
    100 is indeed very low.

    You are right about limited companies and there doesnt 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/
    • Amara
    • By Amara 13th Jul 17, 10:12 PM
    • 1,916 Posts
    • 7,216 Thanks
    Amara
    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.
    Originally posted by MataNui
    His rent alone is more then 400. Mother believes he followed his accountant advice. It's really frustrating for her.
    Tackle your debt, take a part in 1 debt vs 100 days challenge.
    1 debt vs 100 days challenge part 27
    480/500
    Gaining assets
    • MataNui
    • By MataNui 14th Jul 17, 1:19 PM
    • 853 Posts
    • 434 Thanks
    MataNui
    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.
    • jimd-f
    • By jimd-f 14th Jul 17, 3:47 PM
    • 132 Posts
    • 56 Thanks
    jimd-f
    you need to look at a variation for unearned income -ie dividends.
    CMS do not automatically get an unearned income figure from HMRC
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