Tax Credits Confusion

Confused277

Should we not, even if not entitled to wtc be able to apply for tax credits? I'm trying to get my head round it, but they are saying no to both?

Darksparkle

tomtontom wrote: »

Is there any scope for your husband making a liveable income from his self employment? After two years of long hours and very poor results, is it time to look for more productive employment?

A director of a ltd company is not self employed.

Darksparkle

Confused277 wrote: »

Should we not, even if not entitled to wtc be able to apply for tax credits? I'm trying to get my head round it, but they are saying no to both?

You don't need to work or receive WTC to receive CTC. The criertia for CTC is simply based on being the main carer for a child and then how much you receive is based on income.

You need to ignore what they are saying because they are talking crap!

sheramber

he was told he could take £5k and no tax was payable.

Why is it a round sum and not the actual amount of receipted expenditure?

Confused277

He was actually due £5342 but took £5k
The accountant told him to do this then the £342 is still due. I don't see how this affects the tax credits though?

Darksparkle

A director can take whatever salary they wish, it's not the same as someone who is self employed that must declare the business profits.

UKSBD

There is a difference between doing work and being a worker.

Simple solution is to have a written contract of employment stating he is expected to work 30 hours a week at £7.20 an hour.

Additional hours worked can be classed as his duties as an office holder where NMW does not apply.

ie. if he spends half a day on paperwork, accounts, business duties, etc. this is being done under his duties as an Office Holder (Director).

If you are married or a civil partner you can transfer £1100 of your tax allowance to him which means all of the approx £11,500 is tax free.

If the company can't afford to pay the £11,500 just put it in his Directors Loan account which he can have out at a later date tax free.

You may not be entitled to as much Tax Credit (about £1200 less if he earns £11,500 instead of £8500) but his company saves about £600 in corporation tax, and as long he isn't deliberately depriving himself of money he could have drawn from the company you can feel comfortable that you are doing nothing wrong.

FBaby

I thought it was to do with notional income, but surely they would have to look into what the company makes and evidence that the claimant was willingly depriving themselves of an income for the purpose of claiming WTC?

[Deleted User]

FBaby wrote: »

I thought it was to do with notional income, but surely they would have to look into what the company makes and evidence that the claimant was willingly depriving themselves of an income for the purpose of claiming WTC?

That's what I thought too. I've seen many argue that fact to other posters on here except this one!

Darksparkle

FBaby wrote: »

I thought it was to do with notional income, but surely they would have to look into what the company makes and evidence that the claimant was willingly depriving themselves of an income for the purpose of claiming WTC?

Where did the OP say they they were depriving themselves of income?

He took a salary of £8035 which he has declared to tax credits. That was the profit they made so he can't take more.

The £5,000 mentioned is reimbursed expenses which are non taxable and confirmed as such by the accountant. The £342 he didn't take would make no difference to the claim.

The company also has now made a loss so they can't magic up more money to pay the director and they don't need to as the director does not need to pay himself NMW.