Universal Credit - Reporting income and expenses as a 50/50 business partner - HELP NEEDED!

Woodstock24

Hoping someone can make this clear for me as I don't find that the work coach at the jobcentre does.
I own a small business with a business partner, we are 50% each. We pay ourselves through QuickBooks and register payroll, so everything goes through HMRC.
I know that when I report income and expenses for universal credit purposes its 50%, I get confused when it comes to our wages and tax - how am I recording that? This is the part that isn't made clear by work coach. Hoping someone can make this clear for me! 
Thank you 

peteuk

If your reporting your wage via HMRC are you PAYE?  Are you classed as Self employed?

If self employed you need to report your income for the AP on the last day of the AP.  If your employed and PAYE, HMRC will automatical notify DWP of your income. 

Woodstock24

I think I'm classed as employed by the company, rather than self employed. So if DWP get notified, do I leave both mine and my business partners wage and tax off the income and expenses reporting?

NedS

Any wages the company pays are an expense for the business so should be declared as an expense in the AP in which they are paid.

UC uses a simple cash in, cash out model within the AP. For example, say the business has an income (cash into the business) of £5000 during the month, that's the business income.

If, for example, you and your partner are paid PAYE £1500/month GROSS each, then that is a business expense (wages) of £3,000.

The profit is the income - expenses for the month (£2000 in the simplified example above), 50% of which is yours.

The tax box is to report any tax the business has paid directly to HMRC in that month, but this should not be used for income tax deducted from those GROSS reported PAYE salaries above, otherwise you would be deducting the tax twice (double reporting). You would use this box to declare any tax paid to HMRC within the AP such as corporation tax, or tax on self employed earnings if you were not paying yourselves through PAYE.

As you have a 50% interest in the company, you should report half of all income and expenses figures to DWP, representing your 50% share of the business.

Woodstock24

Thanks @NedS - The tax comes out of our business account as a DD. So do I not report that at all anywhere? and also what does AP stand for?
And I just report 50% of both of our wages in the expense part?
Sorry! I'm really new to all this 

Yamor

NedS said:

Any wages the company pays are an expense for the business so should be declared as an expense in the AP in which they are paid.

UC uses a simple cash in, cash out model within the AP. For example, say the business has an income (cash into the business) of £5000 during the month, that's the business income.

If, for example, you and your partner are paid PAYE £1500/month GROSS each, then that is a business expense (wages) of £3,000.

The profit is the income - expenses for the month (£2000 in the simplified example above), 50% of which is yours.

The tax box is to report any tax the business has paid directly to HMRC in that month, but this should not be used for income tax deducted from those GROSS reported PAYE salaries above, otherwise you would be deducting the tax twice (double reporting). You would use this box to declare any tax paid to HMRC within the AP such as corporation tax, or tax on self employed earnings if you were not paying yourselves through PAYE.

As you have a 50% interest in the company, you should report half of all income and expenses figures to DWP, representing your 50% share of the business.

One point I think I disagree with is that most smaller companies only pay over the PAYE liabilities to HMRC every 3 months. As such, on a cash basis, the wage expense in any AP will be the net wages paid, plus the PAYE taxes actually paid in that AP (and the same for pension contributions and payroll giving).

NedS

Woodstock24 said:

Thanks @NedS - The tax comes out of our business account as a DD. So do I not report that at all anywhere? and also what does AP stand for?
And I just report 50% of both of our wages in the expense part?
Sorry! I'm really new to all this 

AP stands for Assessment Period. This is the dates between which your UC month runs (and depends on the date you made your UC claim).

Any payments made to HMRC for the purposes of tax within the AP would be declared as an expense in the tax box.

As I said before, it's simple cash in, cash out accounting. It does not matter when a payment relates to, only when it is actually received or paid out. You are reporting all the payments received in that AP and all the expenses paid in that month.

Yes, you report 50% of both your wages as an expense. The combined wages are the expense, and your share of the business is 50% 

NedS

Yamor said:

NedS said:

Any wages the company pays are an expense for the business so should be declared as an expense in the AP in which they are paid.

UC uses a simple cash in, cash out model within the AP. For example, say the business has an income (cash into the business) of £5000 during the month, that's the business income.

If, for example, you and your partner are paid PAYE £1500/month GROSS each, then that is a business expense (wages) of £3,000.

The profit is the income - expenses for the month (£2000 in the simplified example above), 50% of which is yours.

The tax box is to report any tax the business has paid directly to HMRC in that month, but this should not be used for income tax deducted from those GROSS reported PAYE salaries above, otherwise you would be deducting the tax twice (double reporting). You would use this box to declare any tax paid to HMRC within the AP such as corporation tax, or tax on self employed earnings if you were not paying yourselves through PAYE.

As you have a 50% interest in the company, you should report half of all income and expenses figures to DWP, representing your 50% share of the business.

One point I think I disagree with is that most smaller companies only pay over the PAYE liabilities to HMRC every 3 months. As such, on a cash basis, the wage expense in any AP will be the net wages paid, plus the PAYE taxes actually paid in that AP (and the same for pension contributions and payroll giving).

Thanks - I wasn't aware of that, but of course you are absolutely correct.