Carers Allowance - Are dividends earnings or income?

suprememum

Hi,

As a sole Director of a ltd company - would dividends be considered as earnings or income?

You recieve £81 per wk carer allowance but can only earn £151 per wk (earnings limit)
Would (sole director) dividends be classed as earnings or are they disregarded for the '£151 per wk' earnings limit. 

Some info I've found already:

In a HMRC forum I read a HMRC response "Carer's Allowance is not means tested.
This means that it is not affected by your income or savings, although there is an earnings limit."

And in the govt decision makers guide on how to calculate earnings (a very long document!) it says 'Share dividend is income from capital and should be disregarded'

So is a dividend income or earnings?

Thanks

tacpot12

I can't find anything definitive, but if it guided by the same 'look through' rule that applies to Universal Credit, then it depends on whether your directorship is akin to self-employment. As a sole director, it is akin to self-employment, so your dividend income will be included in your earnings.

(It would not be akin to self-employment if you were a director a large company where your pay was set by a remunerations committee on which you did not sit, and where the dividend policy was agreed by a board of directors where you were just one of the directors.)

But Universal Credit is a relatively new benefit, and the rules are better written and much more comprehensive, so the rules for Carers Allowance (CA) might contain a loophole that would allow you to claim CA when you are already total income is more that £151 a week if some of this is dividend income. It's a moral question as to whether you should claim a benefit designed for people on low incomes when your income is high.  

You might to call the Carers Allowance (0800 731 0297) or write to them at Freepost DWP Carers Allowance Unit. If you call or write, ask them to cite the regulation (or sub-section in the Advice to Decision Makers) that allows them to regard your dividends as self-employed income.  

born_again

Does your dividend count to your personal tax allowance?

Yamor

Dividends are not "earnings", they are income from capital, as per the DMG which you have actually quoted in your post (para. 15076). They will therefore not affect a claim for CA.