Can a Director of a loss making Ltd Co, claim benefits

Mwdn1956

My Business has been struggling for it's first year, and I have been supporting it by loans from a small trust fund I had, that has now run out. I never paid myself any income and not taken any dividends. I have no personal funds now.

Basically, I have messed up and should have taken action sooner, but I underestimated how long it would take to get the business coming in.

I now see business coming in, but I will not be able to draw any dividends until, probably July. But thankfully the running costs are minimal.

In the meantime I am basically skint. I do not have enough funds to go to an accountant to seek advice, as yet.

Can I claim any benefits as a Director.

galante_inc

Don't quote me on this one... but that's a risk anyone takes when starting and running a business...

If the business isn't paying you any salary then the benefits agency wont be interested as they will view this as poor business planning and If you arnt making money then its time to close up shop mate

If you are married and have children to support then you might get an increase in family tax credits but you wouldn't get income support or ESA

antrobus

A director of a company can claim benefits in the same way as any employee of a company can claim benefits. Whether or not any specific director can obtain benefits would depend on the their exact personal circumstances.

HappyMJ

Job Seekers Allowance if you work less than 16 hours a week on the business and are looking for work.

Working Tax Credits if you are single and work more than 30 hours a week in the business. Other minimum hours can apply depending on if you have children.

Mwdn1956

Thanks for your help so far. I would anticipate only needing some help for a few months - as I certainly see income coming in shortly.

I would be surprised if the benefit system as as judgemental as galante suggests. Are you basing your reply on any experience or facts, galante?

BigAunty

Enter your info into the Turn2us online benefits calculator to understand your benefit entitlements.

Look into the rules for the self employed proposed under the move to the Universal Credit benefits system which will replace tax credits, etc, as there is an expectation, and therefore greater conditionality, that the self employed can at least earn the National Minimum Wage from their business activities. The govt are trying to clamp down on the culture of long-term benefits dependency by the self employed who they think ought to wind up their low/no profit businesses and/or seek regular employment.

fishybusiness

Can I claim any benefits as a Director

You can.

I used to run a ltd company and claim housing and council tax benefits. I worried about lack of income, and for the first year or so of business I paid myself when I could, and at times loaned it back to the company to pay for business stock and expenses.

I also didn't have an accountant in the beginning, and when I did find one, he told me pay myself each week, of course it is difficult when there is no money. I ended up paying myself minimum wage, 16 hrs a week. Council benefits team were happy with that, and I needed to produce weekly wage slips and a P60 each year.

Also, once in a while the council asked me about business assets - bottom line I think is that if you have 15k in the business bank and are claiming full benefits, as a sole director, there is something not quite right. Come to think of it now, I'm sure there is a rule that says a director, the only partner of a company can somehow be classed as simply self employed. I can't remember the details, it's worth being aware of.

BigAunty

fishybusiness wrote: »

...

Also, once in a while the council asked me about business assets - bottom line I think is that if you have 15k in the business bank and are claiming full benefits, as a sole director, there is something not quite right. ...

perhaps that's part of the means testing that comes with council tax discount and housing benefit.

i don't believe tax credits are means tested in the same way. I could be wrong but I remember reading criticisms about the fact that some self employed tax credit claimants kept most of their profits in their business bank account while legitimately claiming the maximum tax credits they could and that critics of this policy hope this is something that is getting addressed under UC.

fishybusiness

i don't believe tax credits are means tested in the same way

I tend to agree - I was never asked about assets, only income from various sources whilst a director.

I could be wrong but I remember reading criticisms about the fact that some self employed tax credit claimants kept most of their profits in their business bank account while legitimately claiming the maximum tax credits they could

Wouldn't surprise me, although the council did ask me for bank statements regularly, plus profit and loss, whilst I was self employed. Our benefits were adjusted on the sliding scale depending on my profit.

The change came when I registered as a limited company, all they wanted was the proof of wages and P60. It surprised me, as I could accrue money in the ltd company bank account, which did actually help the business.

That was 3, nearly 4 years ago, perhaps things have changed....

Bestthing

Yes you can claim everything

[Deleted User]

Bestthing wrote: »

Yes you can claim everything

schools still on holiday then :rotfl: