Director of a Ltd Company

IAmWales

Potbellypig wrote: »

Need a bit of an update on this please, as my partner is starting a new job which I'll need roughly £90 a month of childcare costs for...

So my company turned over £44k last tax year of which I paid myself a salary of £11k. The company turned a profit but it's staying in the company. No dividends. My partner earned £11k from her job. As per before, we have 2 kids and rent a house. After looking at the possibilities and reading on here, it's clear HB and C/tax benefit isn't worth the hassle.

First question - is it worth claiming for CTC and childcare? On £22k the past tax year and £22k this year - any idea how much CTC and childcare would we be entitled to?

Second question - if we did claim CTC and childcare, how does it sit legally with me being the Director of a Ltd company and paying myself a wage? I understand that legally they are 2 separate entities, however if the lovely people at the benefits office wanted to see my bank statements then I'm sure they could work out that I have spent more than £22k on bills and 'personal stuff' on a yearly basis. The last thing I want is to claim this and have thousands to pay back.

Any help would be greatly appreciated.

Can we be clear in what you are asking, are you looking for advice on how to minimise your declarable income (as opposed to your true income), in order to claim benefits you do not need?

Potbellypig

IAmWales wrote: »

Can we be clear in what you are asking, are you looking for advice on how to minimise your declarable income (as opposed to your true income), in order to claim benefits you do not need?

Hi IAmWales - I'm looking for the legalities of being a Director of a Ltd company, paying yourself minimum wage (which I'm doing regardless of the enquiry of benefits) and claiming CTC. I'd also like to gauge the experience of people who have been in the same boat before, is it worth the hassle etc?

Darksparkle

Potbellypig wrote: »

Second question - if we did claim CTC and childcare, how does it sit legally with me being the Director of a Ltd company and paying myself a wage? I understand that legally they are 2 separate entities, however if the lovely people at the benefits office wanted to see my bank statements then I'm sure they could work out that I have spent more than £22k on bills and 'personal stuff' on a yearly basis. The last thing I want is to claim this and have thousands to pay back.

Any help would be greatly appreciated.

You can't spend money you don't have so unless you have an overdraft how are you spending more than £22,000?

You can't just say you are taking minimum wage, you need to declare what you actually take.

NYM

Not sure exactly how efficient HMRC Connect system is, but according to articles I've seen, one of Connect's biggest jobs is to hunt for income disparities.
It will process information about your bank account balances and income, and match this with other information – mainly your tax return and, for example, PAYE data submitted.

If the information doesn't tally, start preparing your answers

marliepanda

NYM wrote: »

Not sure exactly how efficient HMRC Connect system is, but according to articles I've seen, one of Connect's biggest jobs is to hunt for income disparities.
It will process information about your bank account balances and income, and match this with other information – mainly your tax return and, for example, PAYE data submitted.

If the information doesn't tally, start preparing your answers

If your business is making 22k and you're taking min wage, is it going to be sustainable to keep investing that level of extra income.

And what is the point? Earn your money and enjoy your money.

NYM

The simplest solution is to ensure tax affairs are totally transparent and every £ is accountable.

Potbellypig

Thanks for the responses. When something doesn't feel right, it genuinely isn't, I guess.

On the flip side to that, if I go to get a loan or a credit card they'll treat me and the company as 2 different things, and go on my wageslip which says £11k a year.

Thanks anyway. If anyone has any other experiences of this, I'd love to knows.

marliepanda

Potbellypig wrote: »

Thanks for the responses. When something doesn't feel right, it genuinely isn't, I guess.

On the flip side to that, if I go to get a loan or a credit card they'll treat me and the company as 2 different things, and go on my wageslip which says £11k a year.

Thanks anyway. If anyone has any other experiences of this, I'd love to knows.

That's not true. Your income is your income.

When applying for mortgages, it's not based on 11k, but your income in total, no matter where it's coming from (with some caveats as course)!

Darksparkle

Potbellypig wrote: »

Thanks for the responses. When something doesn't feel right, it genuinely isn't, I guess.

On the flip side to that, if I go to get a loan or a credit card they'll treat me and the company as 2 different things, and go on my wageslip which says £11k a year.

Thanks anyway. If anyone has any other experiences of this, I'd love to knows.

You and the company are two different things. However if you have money in your personal account that comes from the company that you haven't declared or you are using the company account to pay for personal items and not declaring it as a benefit then they are right to question it.

UKSBD

If you are a genuine employee (with contract and on Paye) as well as a Director, I say put a claim in as you never know what may happen to the business throughout the year and may find you can't draw as big a dividend as you hoped to.

Always allow for the fact you might have an overpayment though.

in 2015/16 I received about £6k in Child tax credits but took a Dividend in March 2016 resulting in a £6k overpayment.

2016/2017 I also received about £6k in tax credits
Due to a number of circumstances the company can't afford to pay me a dividend this year so I have no overpayment.

In my opinion it is best to receive a tax credit and pay it back if you get a dividend, rather than not claim it and then find at the end of the year the company can't afford to pay you a dividend.