Working Tax Credits - Repaying

pierrelejohn

Hi
Ive been reading the sticky posts above, and Im unsure of the answer, hopefully someone can help.

My wife and I are directors of our own LTD company.
year 08-09 we earnt about 40k between us, so got the minimum amounts of tax credits.
last year 09-10 we put in a large investment into our company and therefore didnt receive any money from the company except £11400 in wages (that was for both)
As we didnt know what our income was going to be, obviously the tax credits were based on the year before, when we knew that we were going to be well down on income (march 2010) we told them, and it looks as is we are going to be rewarded a lump sum of £4500.

and we are now picking up £500 per month in tax credits.

Now the bit Im concerned about.
As we invested in the company last year, this years income should be excellent - obviously we still dont know what we will earn - but it should be around 40 - 50 k (for both of us)
we will be telling the tax office this so they can reduce the payments to us, but what about last years lump sum award of £4500 which should be paid to us soon.

Will we have to pay that back ?
or is it subjected to the £25k level

can anyone answer Please !

AnxiousMum

The lump sum is to make up for the shortfall in payments prior to April 2010 right? Your new payments would be based on your predicted earnings for 2010/11 (as you know it will be more than £25K difference). If it takes you a while to see that investment return though - would you not wait until your income actually takes that jump before reporting it? If not needed, you could keep the money paid aside so that you have it there to pay back at the end of the year, but as long as your earnings are still on the low side, you would have that as a safety net. Once you can take a good monthly wage, then notify them of the cange?

pierrelejohn

The lump sum is to make up for the shortfall in payments prior to April 2010 right

yes thats correct

and yes we have decided to wait to see if our earnings do actually go above the £25k threshold and keep any payments we get now to one side as we may need to repay them.

but what about the lump sum payment - would that need to be paid back ?

only_mee

If that is what you are owed, it's yours to spend.

AnxiousMum

The lump sum payment applies to the dates of April 2009 - April 2010 - so if the lump sum payments relates to an underpayment to you during this period, enjoy the lump sum payment

leveller2911

AnxiousMum wrote: »

The lump sum payment applies to the dates of April 2009 - April 2010 - so if the lump sum payments relates to an underpayment to you during this period, enjoy the lump sum payment

And this is exactly why the tax credit system is not fit for purpose.The OP clearly hasn't missed not having the money, being a director of a ltd company they have an income of around £40k, now just because they invested money in their business(which is to be commended) its shown on paper their earnings were low.Lets be clear about this the OP has in investing in their company made the company more valuable and more than likely gives the company the ability to make more money.

The Tax credit system was NEVER designed to indirectly aid company owners to make more money,its designed to help out those in our society who earn low wages have a decent standard of living...

Sorry but "enjoy the £500 per month "the good old tax payers are stumping up just doesn't cut it any more....

The OP clearly doesnt need the money so why are they getting it?? Because we are "Entitled"...........

I just hope this new Government sorts this mess out and soon........People should be encouraged to get more qualified and get better paying jobs, Yes I understand we can't all be doctors but the tax credit system just encourages employers to pay minimum wage knowing the taxpayers will stump up the rest...

Tax credits system is wrong,wrong,wrong......


PS Im not sure if this thread is genuine or just a wind up......

pierrelejohn

Hi
Sorry I take offense to the above post.

The Tax credit system was NEVER designed to indirectly aid company owners to make more money,its designed to help out those in our society who earn low wages have a decent standard of living...

We run our own company - last year we earnt £11,500 between us heaps less then people on benefits.

The OP clearly hasn't missed not having the money

How did we survive ?
the year before we SAVED our money - we didnt go on holidays, down the pub, dont smoke, we SAVED our money as we knew the year ahead would be tight.
We didnt claim ANY benefits last year because we didnt know we could.
so last year we paid our mortgage, school dinners council tax all from our savings because we only earnt £5750 each.
Some people pick up far more in benefits than that.

This year, because we invested we will be ok.

I fail to see why a person earming £40k a year - wasting the lot on expensive holidays, new gadgets, then they lose their job, claim every benefit under the sun because they have no savings, then find another job at £40k is more entitled to the money than us.

The OP clearly doesnt need the money so why are they getting it?? Because we are "Entitled".........

Yes we are entitled, We paid £12000 in corperation tax last year - and never been out of work, never had dole, never had benefits of any kind.
So why when we have no income should we not claim it ? - why should we be slated for claiming something that we are entitled to
We've worked hard for the last 25 years and this is the only claim we have ever made.

And lets not forget, as our income hopefully goes up, we will pay even more tax, so the goverment will get it all back anyway !

Oldernotwiser

pierrelejohn wrote: »

Hi

Yes we are entitled, We paid £12000 in corperation tax last year - and never been out of work, never had dole, never had benefits of any kind.
So why when we have no income should we not claim it ? - why should we be slated for claiming something that we are entitled to
We've worked hard for the last 25 years and this is the only claim we have ever made.!

It's not strictly true that you've not claimed benefits of any kind because you've claimed tax credits for at least 2 years.

pierrelejohn

last year as a lump sum yes, this year we wont get anything as our income will be higher

leveller2911

The facts are rather than taking earnings as income you invested your income from the business back into the business, you earned the money my friend end off.Why should the tax payer subsidise the investment of your company by giving you benefits..

Oh and lastly don't play the old "corporation tax" gag,(you may pay corporation tax but pay naff all in income tax) the two main reasons people set up a LTD company is 1/ Limited Liability with company debts and 2/ Tax incentives.....

It still stands that you earn £40k plus and your getting £500 a month tax credits....

PS Ive been self employed and run my own business for nearly 25yrs and I know about being LTD....

pierrelejohn

So as a business person yourself - self employed - what happened when you bought your tools, equipment, van, etc.

I presume you paid for them from your business, or did you pay for them from your own pocket, then reclaimed the money back,

did your income drop - because you needed this investment ?
if so what did you do ?

as an employer of 8 people all paying tax and NI (and no they aren't on the minimum wage) collecting VAT for the government our business pays a huge amount of tax.