Council Tax Benefit & Self-Employed

linnyhinny

My husband and I are self-employed in the same business and because of present economic conditions are not earning any money. My husband is currently claiming incapacity benefit as he is waiting for hospital test results back and has also put a claim in for disability living allowance but has not heard back yet if successful or not. We have also qualified for working and child tax credit due to minimum earnings this current tax year. My question is can we claim council tax benefit? We have a small amount of personal savings under £16K but our business savings are over £16K and from a on-line benefit health check I did, apparently if you have business assets they don't qualify towards means testing but does anyone know if that means business savings accounts because obviously that money is used for running the business and expenditure. I don't want to go to the hassle of filling in council tax forms and enclosing all our personal details if we don't qualify. We are presently living off these business savings to survive.

dmg24

If you are living off the money from the business then you will have difficulty arguing that it is either not your own savings, or that you are paying yourself a salary from these 'savings'/ assets.

Is the business a limited company? Are the savings/ assets in a separate account from your own, and if so, how are you accounting for the withdrawals to cover your living expenses?

Conor_3

If you are sole traders or a partnership, no as the business savings are counted as personal capital. If it's a limited company, yes you can as the businesses capital isn't taken into account, only the wages you're paid from the company and any dividends. If it's a Ltd company, you list it as your employer.

BUT if the business has over £16k in the bank, it can still afford to pay you the minimum wage so you can't really claim in all honesty because even if it's Ltd, it'd have to pay you the NMW which jointly would take you above any level you'd get CTB for.

linnyhinny

Just to clarify, my husband and I are classed as a partnership and not a limited company and our business accounts are totally separate from our personal accounts but each month or when necessary we transfer a nominal amount necessary as living expenses from the business accounts into the personal accounts and this is recorded as drawings in our accounts records but in doing so, of course our business savings are reducing rapidly. If what you are saying is true and because we are not limited it seems really unfair that the Council Tax benefit people count this as total personal savings. Any other advice would be gratefully appreciated i.e. do you think it would help if we bought more stock to reduce the balance although that would be risky especially if business doesn't pick up or are there any other loopholes we may try?

Oldernotwiser

How can your husband be both self employed and claiming IB? I know that you can get DLA when working but unless he's doing this under the permitted work rules it sounds a bit strange. Your separation of savings into personal and business seem a bit arbitrary and I'm not really surprised that they're being counted for benefits.

Asking people for loopholes so you can manipulate the system is not really what MSE is about!

linnyhinny

My husband is actually claiming sickness benefit but when you are self-employed this is classed as incapacity benefit. We have been in business for over 22 years and this is the first time either of us have gone on the sick so not a bad sick record. He is only receiving £63.75 per week unlike £75.40 SSP if you work for an employer which is usually topped up to the employee's minimum wage. This is the first time we have claimed benefits due to the fact that the business is going through a bad patch which after all isn't that what the benefits system is for as a safety net and not to be abused as sometimes is what happens when you read the newspapers or on tv? So we are only trying to claim for anything we may be entitled to until the business picks up again. From the replies I have received so far it seems you are penalised if you are a sole trader/partnership rather than if you are a limited company.

Oldernotwiser

linnyhinny wrote: »

My husband is actually claiming sickness benefit but when you are self-employed this is classed as incapacity benefit. We have been in business for over 22 years and this is the first time either of us have gone on the sick so not a bad sick record. He is only receiving £63.75 per week unlike £75.40 SSP if you work for an employer which is usually topped up to the employee's minimum wage. This is the first time we have claimed benefits due to the fact that the business is going through a bad patch which after all isn't that what the benefits system is for as a safety net and not to be abused as sometimes is what happens when you read the newspapers or on tv? So we are only trying to claim for anything we may be entitled to until the business picks up again. From the replies I have received so far it seems you are penalised if you are a sole trader/partnership rather than if you are a limited company.

It does confuse matters if you say you're claiming one benefit when you're actually claiming something else! The rest is irrelevant here.

Conor_3

linnyhinny wrote: »

Just to clarify, my husband and I are classed as a partnership and not a limited company and our business accounts are totally separate from our personal accounts

Exactly the same as I ran my business but it was counted as income and savings. Unless Ltd or a PLC, the net income of the business is counted as your income. The balance of the business account is classed as yours.

linnyhinny

Thanks everyone for the advice, much appreciated.