Possible To Pay Myself???

Poppy9

You say you are registered for VAT and if there is money moving into and from your business account the VAT man will think you are trading and come looking for his money.

dickieg

Yes i understand that but it still works out better than the dole, dont forget i am going to try and get something up and running, so hopefully i am going to be putting money from buying and selling in the business, i just wanted to know if this was a feasable plan to save me going on the dole

whitewing

dickie,

Maybe you are clouding the issue by talking about temporarily getting money in from other sources or 'recycling' money.

Is what you actually want to know if you are able to claim tax credits, despite losing the franchise, assuming that you are setting up an alternative business?

And if so, how do you work out your 'expected' earnings for the year such that you won't incur an overpayment of tax credits?

dickieg

Exactly you put it better than me

whitewing

Okay. I'll bump this up for you to see if any of the regulars can help.....

whitewing

I'll try another bump for the evening crew. Any help out there for dickie and his tax credits?

Pennywise

You don't need to pay an artificial wage to get tax credits. The only way wages affects tax credits is to increase/reduce the tax credit award in inverse proportion to your wages. To actually become eligible in the first place is to work the requisite number of hours. If you work (and can prove you are working) say 30 hours per week, that triggers the tax credit award, then the amount of the award is determined by considering the wages etc you receive. You won't be eligible for working tax credit simply by paying a wage - you have to be able to prove you are working. It is very common for self employed (i.e. sole traders and one man ltd cos) to be working but not earning anything - in fact it is probably how most businesses start up and a lot of businesses will have "rough" patches when they make losses and the owner's can't draw out. If you are working the hours, then you can claim tax credits. Just a warning though, assuming you are a one man ltd co, HMRC will expect your company to be paying at least the minimum wage for the hours you are claiming to work - so if you work 30 hours per week, your company needs to pay you roughly £180 per week being the minimum wage, on which your company will have to pay over the tax, ees and ers nic every three months at least. They may waive this requirement if you can demonstrate that the company can't pay a wage, i.e. it has no money of its own, or whatever funds it has are already ring-fenced for future business needs - again, for which, you may have to provide proof in case of enquiry. So, back to your original question, yes, you can pay in money so that the company can pay you the national minimum wage for the hours you work, which in turn, because of the hours worked, trigger a tax credit award. Like I've said throughout, though, you have to be able to provide proof/evidence in case of enquiry to prove that you were acting in good faith and not just manipulating the system to your own ends by pretending to work the hours when you're not, or by artificially not paying a wage when the company could afford to pay it. Just be careful and you should be OK.