Tax credits and company director taking no salary

lifeoflearning · 3 December 2019 at 12:48AM

Hi all,

Trying to understand our position with regards to both WTC and CTC and being a company director that is not drawing any wage or dividends.

My wife will be setting up as the director of a LTD company. She was initially planning on taking no salary or dividends from it to start with (for a couple of years), leaving all profits in whilst she is gaining momentum. We will just use my small wage to live on. Could we still make a CTC and WTC claim or is there legislation against this plan?

Thanks!

poppy12345 · 3 December 2019 at 8:31AM

lifeoflearning wrote: »

Hi all,

Trying to understand our position with regards to both WTC and CTC and being a company director that is not drawing any wage or dividends.

My wife will be setting up as the director of a LTD company. She was initially planning on taking no salary or dividends from it to start with (for a couple of years), leaving all profits in whilst she is gaining momentum. We will just use my small wage to live on. Could we still make a CTC and WTC claim or is there legislation against this plan?

Thanks!

Unless you're already claiming tax credits then you won't be able to start a new claim because all areas are a full Universal Credit area. Other's with more knowledge will answer your other questions.

[Deleted User] · 3 December 2019 at 8:56AM

If you are not taking a wage you won't be classed as employed or self employed sounds more like volunteer work which doesn't attract benefits.

calcotti · 3 December 2019 at 9:10AM

You will be able to claim Universal Credit. If your wife intends to devote her time to her business she will be treated as self employed. After 12 months of running the business the Min8mum Income Floor will be applied meaning that she is treated as earning a certain amount each month even if she earns less. She will have to report all business income and expenditure to DWP each month in order that the monthly UC entitlement can be worked out. Try reading these various links
https://www.gov.uk/self-employment-and-universal-credit
https://www.citizensadvice.org.uk/benefits/universal-credit/on-universal-credit/how-the-minimum-income-floor-works-if-youre-self-employed/
https://www.citizensadvice.org.uk/benefits/universal-credit/on-universal-credit/reporting-self-employed-earnings/
https://revenuebenefits.org.uk/universal-credit/guidance/entitlement-to-uc/self-employment/what-counts-as-self-employment-for-uc/
https://revenuebenefits.org.uk/universal-credit/guidance/entitlement-to-uc/self-employment/calculating-income-from-self-employment/

calcotti · 3 December 2019 at 9:13AM

_shel wrote: »

If you are not taking a wage you won't be classed as employed or self employed sounds more like volunteer work which doesn't attract benefits.

Don’t agree with that. Surely she is either a job seeker with full job search conditionality or she is self employed. If she wants to spend her time establishing the business then she will have to ask to be treated as self employed in order to avoid having to look for employment.

lifeoflearning · 3 December 2019 at 1:42PM

We are already claiming tax credits and so we would not be starting a new claim for UC. So as far as I understand, we would just continue with this claim as we would have no qualifying change in circumstances and would be covered by the transitional payments system (this is my understanding which of course could be wrong!). So just want to understand how we stand with the tax credits side of things for the next couple of years until she starts drawing a salary, at which point we will end the claim.

Tax credits and company director taking no salary

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