New parents looking for guidance

NEH

cte1111 wrote: »

You'll get child benefit of £20.30 per week: http://www.direct.gov.uk/en/MoneyTaxAndBenefits/TaxCreditsandChildBenefit/Childbenefits/Gettingstarted/ChildBenefitandwhoqualifies/DG_073770

From the figures you've given you are likely to also be entitled to tax credits, use the calculator to work this out:
http://www.hmrc.gov.uk/taxcredits/payments-entitlement/entitlement/question-how-much.htm

Child Tax credits maybe....

tooldle

I recall reading something on this site a while ago as per my earlier post. I have searched and found the thread by Meester in 2008. The poster was discussing reducing the dividend to zero to maximise tax credit income, although I believe there was no salary, all payments were originally taken as a dividend. Meester planned to keep his investment within the company and withdraw a much large sum at a later date. Might be best to run though options with your accountant.

Indie_Kid

steveM1978 wrote: »

Like I said before we would actually be better off to both go on "job seekers allowance" and get child care, rent and our spending money for doing nothing.

Except you won't get any help with child care. You may also be sanctioned for up to 26 weeks.

You wouldn't better off at all - you'd receive much less in benefits per week.

[Deleted User]

Does your Wife receive Dividends every Month then? I'm just thinking £6500 salary = 541.67 per Month meaning SMP would be £112.50 for the whole 39 weeks which averages at £487.50 per Month??? Not much difference, unless she does indeed take a dividend each Month???

I don't know where in the Country you live or what the local housing allowance is in your area but I do believe if you seriously think you would be better off on Benefits your in for a shock!

Maybe as a Director your Wife could suggest the Company enhances the Maternity Pay?

zagfles

tooldle wrote: »

I recall reading something on this site a while ago as per my earlier post. I have searched and found the thread by Meester in 2008. The poster was discussing reducing the dividend to zero to maximise tax credit income, although I believe there was no salary, all payments were originally taken as a dividend. Meester planned to keep his investment within the company and withdraw a much large sum at a later date. Might be best to run though options with your accountant.

That won't work because there's a rule that if you work for less than the going rate and the company can afford to pay the going rate, it's treated as notional income.

ubesco

ello, I jacked my job in in 2009. Was on £20,000 a year, but after the tax and stamp was taken out, the cost of running two cars, petrol of £25 a day and everything else, I was worse off than I am now on benefits. Sorry but you have your maths wrong.
I now have 1 car, pay no CT, my mortgage is paid for, and what with the JSA and the disability benefits I get, I have more time to do what I want when I want.

Also, why is she taking out a dividend? Stupid. As a director, she should be increasing her directors loan account and taking out loans instead. The money stays in the company and you are technically borrowing it at currently .5% interest. A lot less than the tax you would be paying. Also, loans are NOT taken into account for TC purposes! See your accountant about that! Dividends used to be a good way of getting round NI etc, but loans are now more common.

tooldle

The company is not obliged to pay the dividend.The choice to not pay a dividend has nothing to do with affordability. As a director minimum wage does not apply.

zagfles

tooldle wrote: »

The company is not obliged to pay the dividend.The choice to not pay a dividend has nothing to do with affordability. As a director minimum wage does not apply.

Minimum wage is not the issue. The going rate for the job is the issue. See:

http://www.hmrc.gov.uk/manuals/tctmanual/TCTM04805.htm

If a claimant provides a service for another person and:

<LI class=filledcircle>the other person makes no payment of earnings or pays less than for a comparable employment, trade or business in the area;

and <LI class=filledcircle>the Commissioner's for Revenue & Customs are satisfied that the other person has the means to pay for, or to pay more for the service, then
[*]The claimant is treated as having an amount of employment or trading incomethat is reasonable for that employment, trade or business.

steveM1978

Wow, a load of responses and some good links for me to click on. thanks very much. I think £20k is the magic number and if you earn less than this then being made redundent is a serious consideration. I have just found out that the nursery is £800 a month. so yes if one of us was on the rock and roll i think we would genuinly be better off, as someone mentioned ealier though there is that "pride" thing I have never been given a single penny that i didnt earn and although i dont think that having a kid entitles you to free money I do believe that paying in to a system that requires you to earn over £20k for it to work is wrong.

I will get her to look in to that directors loan, very interesting. Thanks. PS dont the loans have to be paid back.... sure this is another problem altogether though.

Just got my quote back, £21 a month! woop.

outgoings
Mortgage interest only £890
Gas and Elec £160
Council tax £110
Car loan £300 (only a year left on this)
Car running costs £150
Food and things £400
other costs £250
Savings £450
child care £800

Poo.

Indie_Kid

steveM1978 wrote: »

outgoings
Gas and Elec £160

Can you switch suppliers?

Savings £450

Do you really need this? I have no sympathy for people who whinge they have no money - yet can afford to put money in savings each month.