Tax Credits Confusion

Confused277

Hi

Hoping someone can help as I'm at a loss. I'm making a joint claim for tax credits as my partner has just moved in. Called up the helpline and they are saying we are entitled to nothing.but calculator says we should get a little.my income last year was income support and carers allowance (will obviously just be carers this year.
My partner is director of a limited company which made around £8k profit last year and a loss this year. His p60 for last year states he received £8035 before tax.
Tax credits have said that these amounts coupled with the expenses he was paid from the business (about £5k) mean we are not entitled. I thought expenses were not counted as they weren't taxed? Both my children are in receipt of HRC DLA component so I thought we may get a small amount?
Is it worth applying anyway?

Darksparkle

Whether the company made a profit or loss isn't relevant as the company is a separate entity from your partner.

A director must declare his salary and any dividends.

What are the expenses for?

Can you confirm the total income for 2015/16 and expected income for 2016/17?

How many hours does he work?

Confused277

The expenses were all business related and owed to him ( I don't really understand how this works...think it was office stuff...hotel stays etc) he was told he could take £5k and no tax was payable. Theses not enough to pay dividends, so none of those have been paid.
He works between 38-60 hours depending on the job,
Total income for 2015/16 is £8035 for him and £3200 for me. Expected income for next year is the same.
Tax credits are saying is profit or capital in the business that counts and that the expense payments should be declared as income (but these were not income for tax return) so confused

Darksparkle

Confused277 wrote: »

The expenses were all business related and owed to him ( I don't really understand how this works...think it was office stuff...hotel stays etc) he was told he could take £5k and no tax was payable. Theses not enough to pay dividends, so none of those have been paid.
He works between 38-60 hours depending on the job,
Total income for 2015/16 is £8035 for him and £3200 for me. Expected income for next year is the same.
Tax credits are saying is profit or capital in the business that counts and that the expense payments should be declared as income (but these were not income for tax return) so confused

Perhaps the person has not understood when you have said its a ltd company.

If a sole trader then yes all profit must be declared but not if a company. As mentioned, a director needs to declare salary and dividends. Also any taxable benefits or expenses such as company car. His accountant can go into detail about this but if the expenses aren't taxable they don't need to be declared.

Based on what you've said you are entitled to £341 per week.

The person on the helpline doesn't make the decision anyway, just get an application form.

Confused277

Thanks. I have asked for an application to be sent out. But they were adament that we are due nothing. There's no company car and no dividend payments. Just expenses owed by the company.
I spoke with a line manager at the tax credit helpline who was pretty sure we would get nothing as he is the director. I shall apply and see what they say.

Thanks for your help.

Confused277

Little update, tax credits are claiming that as my partner only claimed To earn £8035 last year and paid no dividends (company made a loss so wasn't possible) we are ineligible for tax credits as he is not paid the nwm.
So apparently we cannot recieve wtc or the child tax credits either?

Anyone have any advice.?

Thanks

Darksparkle

Who has actually told you that? The helpline? A letter?

Did you fill out the form to show he was employed or self employed. You should have competed the employed section as he's a director.

Directors do not need to be paid NMW. Refer them to their own website - https://www.gov.uk/national-minimum-wage/who-gets-the-minimum-wage

Confused277

We received a letter asking to call as they could not complete our claim. I called and they explained that until he is paid nwm we cannot claim anything.
I filled out the employed section and they are aware its a limited company. They want him to pay himself what he is due or take a dividend (we can't there's no money) and then reapply.

Confused277

I did point out that directors don't need to be paid nmw. The woman says tax law is different from employment law and it's a stipulation of claiming tax credits that you are paid nmw. So I'm a bit confused now

Darksparkle

Ask them where in the tax credit legislation it says that.

Confused277

She did quote various regulations at me, and claimed that the only time it's acceptable not to earn minimum wage is if your self employed.
I expect I will have to reapply and see if they accept it. Our accountant was under the impression we were entitled but can't find anything that answers the specific question of nmw tax credits and ltd companies