Self employed LTD company tax credits help!

shocktactics69

Hi,
In January 2009 my partner and his friend bought a small business which is a ltd company.
I cannot make head nor tail of this section on what to declare for tax credits as it is a ltd partnership.
Do I declare dividends? gross profit? drawings? very confused.
He pays national insurance and his tax return for his first year of trading is currently being done for the business but of course his partner is entitled to half any profit.
If someone knows what information they will want to take I would really appreciate it.
S x

toonbaz

is he drawing a salary from the limited company? if so put that in employed earnings. dividends goes in the box for other income Minus the first £300.

Jowo_2

toonbaz wrote: »

is he drawing a salary from the limited company? if so put that in employed earnings. dividends goes in the box for other income Minus the first £300.

Out of curiosity, does this mean that if company directors deliberately minimise their dividends and let the income sit in the business bank account, they can effectively change their circumstances to maximise their receipt of tax credits, until such time they decide to award themselves greater dividends?

I'm a bit puzzled about the bit missing between salary (which is often set low to escape being clobbered by NI) and dividends (which can be drawn as when the directors wish) and its impact on Tax Credits (the bit missing being the income sitting in the company bank account which can either be paid out as dividends in the future or reinvested).

toonbaz

as far as im aware you are quite right that directors could choose to take lower dividends and would not need to declare any money that is sitting in a business account, they would just have to declare any larger amou nt of dividends if they were taken in the future.

shocktactics69

Hi,
It is a LTD partnership so they take a small salary of £500 per month and pay the NI stamp. They then take a didvidend depending on how the business is performing, sometimes this is higher or lower and is determined by how well the business is running which is why a dividend is taken as opposed to two salarys.
The tax credits website doesnt make much sense so I am unsure whether to declare the salary and the dividend taken as other income.
He has only done one year of trading so far so the accounts are being prepared.
I have to declare a change in circumstances thats all but cant find the right information on what to include.
I can never seem to get through to the helpline no matter what time of day I call.
Regards s x