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  • FIRST POST
    • T-b-P
    • By T-b-P 18th Nov 17, 1:48 AM
    • 16Posts
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    T-b-P
    What counts as "income" for credit card applications for a company director
    • #1
    • 18th Nov 17, 1:48 AM
    What counts as "income" for credit card applications for a company director 18th Nov 17 at 1:48 AM
    How does it wok for someone working through a company as director and 100% shareholder?
    Using these figures as an example:

    Company turnover £55K
    Salary taken £10K
    Other expenses £5K
    Pre-tax Profits £40K
    Dividends £15K

    I know for mortgage purposes I'm treated as "self employed" and some lenders will accept the amount drawn as salary plus the company's pre-tax profits as "earnings" (ie. £50K in these figures). I'm not sure if it works the same for credit card applications or if it would only be the amounts drawn of £25K in this case (salary+dividends)?
Page 1
    • Ben8282
    • By Ben8282 18th Nov 17, 6:26 AM
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    Ben8282
    • #2
    • 18th Nov 17, 6:26 AM
    • #2
    • 18th Nov 17, 6:26 AM
    I have two answers.

    The first is to use whatever figure you entered on your latest tax return (ie the amount that you paid tax on).

    My second answer is that you should show yourself as employed entering your salary plus the dividends, assuming that the dividends are expected to be paid regularly and are not a one-off. You cannot use the pre-tax profit figure as your income. If you wish to increase your income for this purpose, increase your salary and/or your regular dividends.
    Last edited by Ben8282; 18-11-2017 at 6:29 AM.
    • chattychappy
    • By chattychappy 18th Nov 17, 9:58 AM
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    chattychappy
    • #3
    • 18th Nov 17, 9:58 AM
    • #3
    • 18th Nov 17, 9:58 AM
    It is your income, not the company's. The company is a separate legal person.

    So the answer is salary + dividends, ie £25K.

    I feel you shouldn't use what went on your tax return, because that is rather out of date.

    Whatever you put down, keep a note and ensure future CC applications are consistant.
    • jonesMUFCforever
    • By jonesMUFCforever 18th Nov 17, 2:03 PM
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    jonesMUFCforever
    • #4
    • 18th Nov 17, 2:03 PM
    • #4
    • 18th Nov 17, 2:03 PM
    ...........But if you have a bad year then your income will probably reduce to enable you to keep the dividend at the current rate (favorable tax treatment) so IMO income is salary.

    OP no mention in your post of net profits - do you take it all out?
    What goes around - comes around
    give lots and you will always receive lots
    • Kim_13
    • By Kim_13 18th Nov 17, 4:00 PM
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    Kim_13
    • #5
    • 18th Nov 17, 4:00 PM
    • #5
    • 18th Nov 17, 4:00 PM
    I'd have said 25K also.

    Putting salary only, at 10K is likely to rule you out of obtaining some cards.

    Future applications should be consistent, but of course income can change. As long as you can prove whatever you put down you can't be guilty of any fraud.

    What you cannot do is put down the company's turnover or profit - as another poster said, a limited company is a separate legal entity from you.

    Expenses also shouldn't be put down - it is not money earned but money reimbursed. Including it could amount to deception.
    Last edited by Kim_13; 18-11-2017 at 4:03 PM.
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    • Potbellypig
    • By Potbellypig 19th Nov 17, 8:02 PM
    • 162 Posts
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    Potbellypig
    • #6
    • 19th Nov 17, 8:02 PM
    • #6
    • 19th Nov 17, 8:02 PM
    How does it wok for someone working through a company as director and 100% shareholder?
    Using these figures as an example:

    Company turnover £55K
    Salary taken £10K
    Other expenses £5K
    Pre-tax Profits £40K
    Dividends £15K

    I know for mortgage purposes I'm treated as "self employed" and some lenders will accept the amount drawn as salary plus the company's pre-tax profits as "earnings" (ie. £50K in these figures). I'm not sure if it works the same for credit card applications or if it would only be the amounts drawn of £25K in this case (salary+dividends)?
    Originally posted by T-b-P
    Similar situation here. I've put salary and dividends and never had any issues.
    • indierocker85
    • By indierocker85 21st Nov 17, 9:27 PM
    • 1,962 Posts
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    indierocker85
    • #7
    • 21st Nov 17, 9:27 PM
    • #7
    • 21st Nov 17, 9:27 PM
    How does it wok for someone working through a company as director and 100% shareholder?
    Using these figures as an example:

    Company turnover £55K
    Salary taken £10K
    Other expenses £5K
    Pre-tax Profits £40K
    Dividends £15K

    I know for mortgage purposes I'm treated as "self employed" and some lenders will accept the amount drawn as salary plus the company's pre-tax profits as "earnings" (ie. £50K in these figures). I'm not sure if it works the same for credit card applications or if it would only be the amounts drawn of £25K in this case (salary+dividends)?
    Originally posted by T-b-P
    Best bet is to ask accountant, but I believe for personal applications they look at personal income, which in this case, would be £25k, made up of your salary and dividends.
    Live for what tomorrow has to bring, not what yesterday has taken away
    • owen86
    • By owen86 4th Dec 17, 10:09 PM
    • 1 Posts
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    owen86
    • #8
    • 4th Dec 17, 10:09 PM
    • #8
    • 4th Dec 17, 10:09 PM
    I'm in a similar position but 50% shareholder. I have generally entered take home salary + dividends for the year. I do wonder if I should state salary before or after tax though?
    • chattychappy
    • By chattychappy 4th Dec 17, 10:39 PM
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    chattychappy
    • #9
    • 4th Dec 17, 10:39 PM
    • #9
    • 4th Dec 17, 10:39 PM
    I'm in a similar position but 50% shareholder. I have generally entered take home salary + dividends for the year. I do wonder if I should state salary before or after tax though?
    Originally posted by owen86
    For salary, income is usually stated as before tax.

    In the case of dividends, I would put down what you receive. Of course this is effectively after some tax has been deducted, but in this case the tax liability is on the company, not on you. (Though of course there may well be further dividend tax to pay.)
    • Abbey1991
    • By Abbey1991 4th Dec 17, 11:00 PM
    • 72 Posts
    • 10 Thanks
    Abbey1991
    I know for mortgage purposes I'm treated as "self employed" and some lenders will accept the amount drawn as salary plus the company's pre-tax profits as "earnings" (ie. £50K in these figures). I'm not sure if it works the same for credit card applications or if it would only be the amounts drawn of £25K in this case (salary+dividends)?
    Originally posted by T-b-P
    Effectively you earn a £55k gross salary in a more tax-efficient structure than PAYE.

    So it is reasonable to put down £55k in answer to the income question on a vaguely worded credit card application.
    • Chrysalis
    • By Chrysalis 5th Dec 17, 6:44 AM
    • 2,069 Posts
    • 951 Thanks
    Chrysalis
    Income would be what you personally get from the company, not the company income.
    • 5557223
    • By 5557223 5th Dec 17, 11:53 PM
    • 31 Posts
    • 8 Thanks
    5557223
    OP, if they asked you to prove your income, you could show them your tax return, which will show £25k based on your post.
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