Income falling by £70k - how do I claim tax credits?

meester

dmg24 wrote: »

I don't think that lil_me was offensive or abusive. I find your posts much more offensive.

but people like this make me sick, never wished for someones business to to seriously fail until now. It's fraud, I don't care what back exit you are using to do it, it's fraud. I don't agree with it, I find it disgusting, I hope that one day your children find out that you brought them up by doing such things and hate you for it.

I really must stop responding to trolls.....

blahdog

meester wrote: »

I really must stop responding to trolls.....

The irony! :rotfl:

poppy_the_saving_cat

I didnt think you could claim tax credits if you had over a certain amount in the bank either actually.

meester

poppy_the_saving_cat wrote: »

I didnt think you could claim tax credits if you had over a certain amount in the bank either actually.

We will not normally take capital (that is, deposits in current and
savings accounts at banks and building societies, most lump sum
payments and the value of property, shares and other investments) into
account when we work out your entitlement to tax credits

Most benefits (JSA, Income Support, Housing Benefit, etc.) have a capital test. Tax credits do not.

See

http://www.hmrc.gov.uk/leaflets/wtc2.pdf

for information

dmg24

meester wrote: »

but people like this make me sick, never wished for someones business to to seriously fail until now. It's fraud, I don't care what back exit you are using to do it, it's fraud. I don't agree with it, I find it disgusting, I hope that one day your children find out that you brought them up by doing such things and hate you for it.

I really must stop responding to trolls.....

lil_me stated an opinion that was formed from the information you had given. I agree with them, and it does seem that most other posters on this thread do also.

What kind of an example do you think you are setting for your children? If they follow your example, then no doubt they'll also be sponging as soon as they are old enough to!

PasturesNew

It reads to me that he will probably bung all that into a pension scheme.
Thereby only earning £11,200 between 2 people.
Thereby claiming tax credits.

If you owned your own home outright and were being taxed/NI'd 50% on the £70k it might seem much more sensible to bung the lot into a pension for the future.

This, I believe is legitimate. And it is how the rich manage to work the system.

I'd do it if I were in that position.

NAF_3

Meester has not done anything illegal from what I can see - merely asking how to do something legally - I see it every day and its a sad fact of life.

The one difference between Meester and the worst sort of people I deal with is that at least he has put money back into the coffers. There are other threads on here where people are asking how to hide capital in order to claim benefit or get more benefit. They certainly deserve vilification but dont seem to be receiving it.

IFA

Completely and utterly morally wrong. I help the needy not the greedy sorry..

meester

PasturesNew wrote: »

It reads to me that he will probably bung all that into a pension scheme.
Thereby only earning £11,200 between 2 people.
Thereby claiming tax credits.

If you owned your own home outright and were being taxed/NI'd 50% on the £70k it might seem much more sensible to bung the lot into a pension for the future.

This, I believe is legitimate. And it is how the rich manage to work the system.

I'd do it if I were in that position.

Hi,

thanks for the suggestion.

That is actually a good idea.

I pay 2*salaries of £5,435 to me and wife = £10,870.

The tax credit threshold is £6,420 from next year.

So that's £4,450 of income being 'taxed' at 39% for tax credits.

We can pay £4,450 into our pensions, earning tax relief at 20%, giving us £5,562.50 gross. But we also gain an extra £1,735.50 in tax credits. So the effective tax relief on the pension payment works out as £2,848. Which is higher rate relief on the contribution in effect, without paying any higher rate tax.

There also might be the option for the company to pay a package that is mostly pension, if it is deemed that I am not being paid an economic rate for the job. Because pensions count as remuneration. And that would definitely be 100% legal and valid.

E.g., if a market rate for my skills is £40k, then a package of £5.4k salary, and £34.6k pension would be fair market rate. Obviously the company gets its 22% (soon) Corporation Tax relief on the full package, and I don't pay any tax either. A £34.6k pension payment represents £20,241 net dividend after higher rate tax, so instead of £20,241, I get £34,600 plus £9,565 maximum tax credits = £44,165. Which overall represents 54% tax relief. Which is even better than the 40% above. And at that level of tax relief, pension contributions are definitely compelling.

meester

IFA wrote: »

Completely and utterly morally wrong. I help the needy not the greedy sorry..

Don't care.

Seeing that you seem to spend most of your time on the 'Gambling Introductory Offer Loopholes ' forum, it's a bit rich to talk about greed.