Possible To Pay Myself???

dickieg

Ive got my own limited company that as borought a franchise, im VAT registered,ive been unable to work for the last month and have recieved a letter saying they are going to take the contract off me. What i want to know is can i pay enough money into my business account each month to pay my own wages back to myself, if this is possible i can still claim working/child tax credits, thus meaning i wouldnt have to go on the dole. The money i paid in would just keep getting recycled ie i pay £800 in the business account each month and pay myself £800 back in wages each month. Obviousley i know the end of the year im still going to have various bills tax/ni/accountant etc. But i am going to try to earn money by a different means (legal i might had) buying and selling. Is this possible, thanx in advance

ukbill69

Id pay yourself £100 per week/ £400 per month, this is tax threshold. The pay rest in wages as a dividend.

dickieg

Thanx for that, £800 was just an example figure, i just wandered if i could pay x amount in the bank and then pay it myself back, the main reason being id get more than on the dole off tax credits. I was on the dole last year for a couple of months and i was treated like sh*t,even though it was the first time in over 25 years. If it is possible can i say im paid it for doing work at my parents house say.

fengirl_2

I dont understand - where is the £800 coming from?

dickieg

The £800 comes from what i pay myself at the moment by transfer from the business account to my personal account each month, but obviously i can drop this amount if i want, HTH

whitewing

Right, so let me see if I come some way to understanding.

You had a franchise, but this is going to stop (soonish).

You have £800 in your business account from the franchise.

You want to pay that £800 to your personal account in July as your wages as at end June (for example).

You will then pay the £800 back to the business account during July as income.

You will then pay yourself £800 at the end of July as wages into your personal account.

The purpose of doing this is so you can claim tax credits, rather than other types of benefits.

In the meantime you will set up another business, which eventually you will earn enough to live off.

You fully intend to pay all tax, NI etc and adjust the figures at the end of the year so tax credits is for a genuine amount.

Is this the correct understanding?

It sort of sounds dodgy to me, but I can begin to see why you think it could work. I can't offer any advice, I'm afraid.

dickieg

Ive actually got more than £800 in the business account, but please forget the amount i would alter this, last year when i was on the dole i was treated like sh*t and i refuse to be treated like that again, they are threatening to take the contract off me as i have been off sick for a month, without pay i might had, if i cant do it this way i will go stealth which i dont want to do but if needs be i will. In nearly 30 years of working i have only ever been paid £120 in social benefits.

paulwf

Surely an £800 cash injection each month, £800 drawings and no sales is going to set huge alarm bells ringing at HMRC at year end?

Have you sought legal advice from a specialist franchise solicitor? For sole trader franchises having a month off sick doesn't sound that uncommon, most franchise agreements are around 50 pages long and should cover this area. Can you get an alternative franchise or set up on your own, i.e. does the anti competitive clause still stand if they are the ones to terminate your contract? Could you employ staff or get help from other franchisees to run your franchise until you are well enough to return?

dickieg

As i say forget the £800 being paid in, i could just pay say £2000 in to cover me for quite a few months, the reason i want to keep my company name going is because i want to try and get something else up and running

prowla

You can tell companies house that the company is dormant, and that will keep it going as an entity. Or you can simply post null returns for VAT.

I'm not sure what the legalities are of being the owner/director of a company with a wad of cash in it and not paying whilst claiming benefit.
But it does sound dodgy.

If you have a defined salary that you pay, then you can pay that from company funds regardless of whether it is earning at a given point in time.

But don't forget that the company will also have to pay tax at year-end.
So don't take all the money out.

dickieg

So heres the scinario eg, my parents pay me £2000 for painting their house, i pay this into the business account, with this i can pay myself £400 a month for the next 4months, after this time i pay the equivalent of £1200 back in that my parents have given me for doing odd jobs around their house. I understand the end of the year i will pay tax etc on this, but the credits i get will still be better than going on the dole surely, and as you can see this way it dosent look dodgey