Spouse Employment Status if working with Husband in his LTD company for UC claim purposes

Jazztheman

I am a sloe Director fo a limited company. Married with two children
I do not have any salary arrangements from the company and do not pay any PAYE or NIC. I only pay corporation tax.
I used to claim Working Tax Credit, Child Tax & Child Benefit (2015, 16, 17, 18) in early 2019 my wife (who never worked in this country) started to work with me on a part-time basis. I declared her earnings to HMRC early in the year and they calculated that we have been overpaid by £3k. HMRC stopped all payments since and is demanding payment from us.

My wife helps me in writings ups for a client and this particular work is becoming regular and hence is her participation (approx 16-20 hrs a week) including commuting to the client premises once a week.

With HMRC stopping benefits our income has dropped by a third and we are feeling the pinch. We would like to apply for Universal credit now. We got stuck on my wife's employment status for UC/HMRC purposes.

I would very much appreciate advice and whether I should also arrange for any NIC and/or Self Assessment for myself (and probably my wife).

Also if we can get HMRC to revise their early decision on overpayment because it surely has been a wrong decision

unforeseen

What money are you taking out of the company and how and how much are you paying your wife as an employee?

I assume that you have set up PAYE/NIC for your wife.

[Deleted User]

Read this https://www.turn2us.org.uk/Jargon-buster/Minimum-Income-Floor

Jazztheman

Thank you for your reply.

Money I take out of the company are mostly what is left from invoices receivables’ that are paid into the company’s’ bank account . Since April 19 there has been very little coming through there. I started putting (the only regular) client cheques (of approx. £2500 a month) into our joint (personal) bank account because the company bank account has reached its overdraft limit. I currently can take a net of £1600 a month from that as pay.

I originally started paying my wife £800 a month. Since May 19 I pay her approx. £450. I have no fixed payment method. Sometimes I transfer to her own bank account from the joint bank account and mostly she spends it from the joint bank account.
She has a national insurance number but does not pays contributions nor any PAYE.

[Deleted User]

Jazztheman wrote: »

Thank you for your reply.

Money I take out of the company are mostly what is left from invoices receivables’ that are paid into the company’s’ bank account . Since April 19 there has been very little coming through there. I started putting (the only regular) client cheques (of approx. £2500 a month) into our joint (personal) bank account because the company bank account has reached its overdraft limit. I currently can take a net of £1600 a month from that as pay.

I originally started paying my wife £800 a month. Since May 19 I pay her approx. £450. I have no fixed payment method. Sometimes I transfer to her own bank account from the joint bank account and mostly she spends it from the joint bank account.
She has a national insurance number but does not pays contributions nor any PAYE.

This wage/income won't be accepted by universal credit. See the link I posted above about the minimum income floor

Caz3121

I would suggest you need help from an accountant
your wife may be classed as an employee so you should be running payroll
your funds taken from the business, dividends?, would be declarable and taxed via your self assessment
once your business bookkeeping is updated and income understood then you would be able to address whether any overpayments are valid or not
some details on UC for limited company directors here https://www.gov.uk/self-employment-and-universal-credit

Jazztheman

Thank you for your reply.

What do you suggest I should do to access benefits?

NedS

Firstly, to answer the question in the title of your thread, from what you have described it sounds like your wife is an employee of your company. You say you are a sole director, therefore I assume she is not a director of the company so in that case if she is performing work and being paid for it, she is an employee. As such, you should be reporting her PAYE earnings to HMRC every pay period online (RTI) as that is your responsibility as an employer.


For UC purposes, you are self employed and the MIF will apply to you, and your wife is employed and her employed earnings will be taken into account when calculating your household entitlement to UC.


UC will determine your self employed earnings on a monthly basis. UC will want to know how much money has come into the business (income) and how much money has gone out of the business on business expenses (inc wages for your wife, stock, etc) and what is left each month is your self employed earnings for the month for UC purposes.

unforeseen

I started putting (the only regular) client cheques (of approx. £2500 a month) into our joint (personal) bank account because the company bank account has reached its overdraft limit

Oh dear! I don't know what to say about that.

If your company is permanently at its overdraft limit isn't that trading while insolvent?

Paying an employee less than NMW is an offence in its own right.

Blatchford

unforeseen wrote: »

Oh dear! I don't know what to say about that.

I do. There is nothing apparently legal in any of this and not being able to claim benefits is conceivably the last of their problems. Some of what they have described here potentially carries prison sentences! The poster urgently needs to get some serious advice on how they are conducting their company affairs.