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  • FIRST POST
    • heffa_lump
    • By heffa_lump 6th Jun 18, 10:03 PM
    • 6Posts
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    heffa_lump
    LTD Company Director Claiming HB - I'm not self-employed though right???
    • #1
    • 6th Jun 18, 10:03 PM
    LTD Company Director Claiming HB - I'm not self-employed though right??? 6th Jun 18 at 10:03 PM
    Hello!

    In the last couple of months my partner and I, have applied for housing benefit and council tax reduction. We are both directors of a limited company (which has a third person outside of our household as a secretary, if that is relevant??), and we are the two only shareholders. A limited company is it's own legal entity, and as directors we are considered employed by this company (as office-holders), though we are exempt from minimum wage. We have been paid in dividends the years that we had profit, and also received late payments from the company which were repayments for assets brought into the company at it's start. This year the company has taken a turn for the worse, a lot of work getting pushed months ahead, or payments coming in late, and we have not had any profits yet (though we expect this to change as we head towards Q4), so we have not been able to be paid dividends, hence the benefits being needed so we aren't kicked out of our home.

    OK, phew, backstory done, here is the question. Our application for benefits was approved and we have been receiving benefits for a few months, however we got a letter today which states "You have not supplied all the details we require to calculate your entitlement" and asking us to fill in a "Self-employment earning information" form. Firstly I don't understand what they mean by us not having supplied the details as we gave them all the information on any directors remunerations, with our bank statements showing these going as far back as a year and a half. It seems strange that they would have calculated our benefits and been paying this to us for a few months if this was the case. My main issue is that they want us to fill in this self-employment form, when we are not self-employed. The reason I worry is that at least where HMRC is concerned if you are self-employed ANY earnings get counted as income, even if you are selling some old junk or other personal items on Ebay. I'm not sure if this is the case with the council? I do sell a bit on Ebay (since our HB don't cover our full rent and bills by a long shot, we have had to sell personal stuff we didn't want to sell). I wouldn't consider this income seeing as it's all personal items, but it did amount to a bit of money (about 2k) though this isn't something that we can keep doing since we will run out of stuff in our home to sell.

    Our earnings since applying haven't changed at all, so the numbers are the same, it's just that I'm really not comfortable filling in something saying I am self-employed. I've heard that if the council considers you self-employed you are required to show your bank statements and accounts every 3 months. I have nothing to hide, but this seems both stressful and invasive. Not to be a tinfoil hatter, but I don't think the government needs to know every small detail about my life.

    Does any one have any experience claiming benefits as a director? I have had a look through these forums but none of the cases are quite like ours, as some people have been the sole director or owner of the company which indeed does class them as self-employed in the eyes of the LA, however since we are 2 directors, though in the same household (unmarried) I'm not sure how this works. It's a very specific case, so I understand there may not be any clear cut answer, but I just want to know what I should be providing them to keep my benefits coming in, and if there may be any downfall to having them class me and my partner as self-employed.

    Any advice is appreciated, I don't want to do anything wrong, I'm just really confused as our circumstances are not as ordinary as what you can find info on online. PS sorry for rambling I don't normally post on forums..
Page 1
    • Blackbeard of Perranporth
    • By Blackbeard of Perranporth 6th Jun 18, 10:26 PM
    • 5,281 Posts
    • 31,491 Thanks
    Blackbeard of Perranporth
    • #2
    • 6th Jun 18, 10:26 PM
    • #2
    • 6th Jun 18, 10:26 PM
    Hello!

    In the last couple of months my partner and I, have applied for housing benefit and council tax reduction. We are both directors of a limited company (which has a third person outside of our household as a secretary, if that is relevant??), and we are the two only shareholders. A limited company is it's own legal entity, and as directors we are considered employed by this company (as office-holders), though we are exempt from minimum wage. We have been paid in dividends the years that we had profit, and also received late payments from the company which were repayments for assets brought into the company at it's start. This year the company has taken a turn for the worse, a lot of work getting pushed months ahead, or payments coming in late, and we have not had any profits yet (though we expect this to change as we head towards Q4), so we have not been able to be paid dividends, hence the benefits being needed so we aren't kicked out of our home.

    OK, phew, backstory done, here is the question. Our application for benefits was approved and we have been receiving benefits for a few months, however we got a letter today which states "You have not supplied all the details we require to calculate your entitlement" and asking us to fill in a "Self-employment earning information" form. Firstly I don't understand what they mean by us not having supplied the details as we gave them all the information on any directors remunerations, with our bank statements showing these going as far back as a year and a half. It seems strange that they would have calculated our benefits and been paying this to us for a few months if this was the case. My main issue is that they want us to fill in this self-employment form, when we are not self-employed. The reason I worry is that at least where HMRC is concerned if you are self-employed ANY earnings get counted as income, even if you are selling some old junk or other personal items on Ebay. I'm not sure if this is the case with the council? I do sell a bit on Ebay (since our HB don't cover our full rent and bills by a long shot, we have had to sell personal stuff we didn't want to sell). I wouldn't consider this income seeing as it's all personal items, but it did amount to a bit of money (about 2k) though this isn't something that we can keep doing since we will run out of stuff in our home to sell.

    Our earnings since applying haven't changed at all, so the numbers are the same, it's just that I'm really not comfortable filling in something saying I am self-employed. I've heard that if the council considers you self-employed you are required to show your bank statements and accounts every 3 months. I have nothing to hide, but this seems both stressful and invasive. Not to be a tinfoil hatter, but I don't think the government needs to know every small detail about my life.

    Does any one have any experience claiming benefits as a director? I have had a look through these forums but none of the cases are quite like ours, as some people have been the sole director or owner of the company which indeed does class them as self-employed in the eyes of the LA, however since we are 2 directors, though in the same household (unmarried) I'm not sure how this works. It's a very specific case, so I understand there may not be any clear cut answer, but I just want to know what I should be providing them to keep my benefits coming in, and if there may be any downfall to having them class me and my partner as self-employed.

    Any advice is appreciated, I don't want to do anything wrong, I'm just really confused as our circumstances are not as ordinary as what you can find info on online. PS sorry for rambling I don't normally post on forums..
    Originally posted by heffa_lump
    Question. Are you running a business?

    If yes, why are you claiming benefits.
    I am Blackbeard of Porthperan!
    The views expressed here are subjective!
    • heffa_lump
    • By heffa_lump 6th Jun 18, 10:40 PM
    • 6 Posts
    • 0 Thanks
    heffa_lump
    • #3
    • 6th Jun 18, 10:40 PM
    • #3
    • 6th Jun 18, 10:40 PM
    Question. Are you running a business?

    If yes, why are you claiming benefits.
    Originally posted by Blackbeard of Perranporth
    As I mentioned above the company took an unforeseen turn and we have not been able to get paid yet this year. There is no reason why someone who runs a business can not claim HB. Seems like you didn't really read my post though or you wouldn't have asked either of your questions.
    • pmlindyloo
    • By pmlindyloo 6th Jun 18, 11:21 PM
    • 11,726 Posts
    • 13,600 Thanks
    pmlindyloo
    • #4
    • 6th Jun 18, 11:21 PM
    • #4
    • 6th Jun 18, 11:21 PM
    You might like to have a read of this thread:

    https://forums.moneysavingexpert.com/showthread.php?t=5622138

    Check back in the morning for more replies. I will try and do some research for you.
    • pmlindyloo
    • By pmlindyloo 7th Jun 18, 9:27 AM
    • 11,726 Posts
    • 13,600 Thanks
    pmlindyloo
    • #5
    • 7th Jun 18, 9:27 AM
    • #5
    • 7th Jun 18, 9:27 AM
    So according to the HB/CTB Guidance manual W2.316

    you are an employed earner.

    W2.316 Office holders, such as company directors and others whose income tax is payable under Schedule E, are liable for Class 1 contributions in the same way as employees. They are therefore employed earners, and should be assessed as such.
    • pmlindyloo
    • By pmlindyloo 7th Jun 18, 9:35 AM
    • 11,726 Posts
    • 13,600 Thanks
    pmlindyloo
    • #6
    • 7th Jun 18, 9:35 AM
    • #6
    • 7th Jun 18, 9:35 AM
    And as regards capital in the company it seems that it is disregarded (hope I've read it correctly)

    http://www.legislation.gov.uk/uksi/2006/213/part/6/crossheading/capital/made

    particularly nos 5 - 8

    As regards the self employment form they sent I would telephone and say that you are not self employed so do not need to complete this.

    Since some of the call handlers may not be experienced in this then say you have done some research and believe you should be treated as an employed earner and the capital/assets of the company disregarded. Ask to speak to a manager/supervisor or ask for a call back when they have looked into it.

    Please come back and let us know how you get on.

    I hope your business picks up soon.
    • WillowCat
    • By WillowCat 7th Jun 18, 1:35 PM
    • 821 Posts
    • 997 Thanks
    WillowCat
    • #7
    • 7th Jun 18, 1:35 PM
    • #7
    • 7th Jun 18, 1:35 PM
    Is the issue with council tax benefit only? Each council now sets its own rules for CTB, and many councils have started to follow the UC guidance which ignores Ltd company structure and treats them as self employed (and set a minimum income floor too).

    As pmlindyloo says, for housing benefit you should be treated as an employed earner
    • Pennywise
    • By Pennywise 7th Jun 18, 1:59 PM
    • 10,406 Posts
    • 19,410 Thanks
    Pennywise
    • #8
    • 7th Jun 18, 1:59 PM
    • #8
    • 7th Jun 18, 1:59 PM
    The reason I worry is that at least where HMRC is concerned if you are self-employed ANY earnings get counted as income, even if you are selling some old junk or other personal items on Ebay.
    Originally posted by heffa_lump
    Whoever told you that is wrong. Selling personal stuff is NOT regarded as income by HMRC at all.
    • heffa_lump
    • By heffa_lump 7th Jun 18, 5:18 PM
    • 6 Posts
    • 0 Thanks
    heffa_lump
    • #9
    • 7th Jun 18, 5:18 PM
    • #9
    • 7th Jun 18, 5:18 PM
    As regards the self employment form they sent I would telephone and say that you are not self employed so do not need to complete this.

    Since some of the call handlers may not be experienced in this then say you have done some research and believe you should be treated as an employed earner and the capital/assets of the company disregarded. Ask to speak to a manager/supervisor or ask for a call back when they have looked into it.

    Please come back and let us know how you get on.

    I hope your business picks up soon.
    Originally posted by pmlindyloo
    Thank you so much for all the info, it has been very helpful! I am writing to them now to clarify the above you mentioned. Honestly I don't mind if the companies capital is counted even, as there really isn't much there at the moment. I just don't want to have to be showing the fulls ins and outs of the business every 3 months, as this is what I have understood self-employed people have to do.

    On question I have, you mentioned "directors and others whose income tax is payable under Schedule E" I am not sure what Schedule E is? I will try to have a search around to see if I can better understand it, just to really make sure this is relevant to us!

    Thank you again for the help! I will let you know what they say.
    • heffa_lump
    • By heffa_lump 1st Aug 18, 10:01 PM
    • 6 Posts
    • 0 Thanks
    heffa_lump
    Just an update on this!

    I emailed my the benefits people and explained the situation citing HB/CTB Guidance manual W2.316 and they accepted that I am indeed not self employed and did not need to fill in the self employed form. They did however ask to see any payments of dividends made to myself since I started receiving benefits, which I complied with, and as a show of good faith I even let them see my company accounts, so they could be assured I was not hiding any money there (though this was not required). All in all it was cleared up very quickly and they were very understanding.
    • Darksparkle
    • By Darksparkle 2nd Aug 18, 6:21 AM
    • 5,240 Posts
    • 3,408 Thanks
    Darksparkle
    On question I have, you mentioned "directors and others whose income tax is payable under Schedule E" I am not sure what Schedule E is? I will try to have a search around to see if I can better understand it, just to really make sure this is relevant to us!

    Thank you again for the help! I will let you know what they say.
    Originally posted by heffa_lump
    It was essentially how employment income was taxed. Doesn't actually exist anymore since tax laws were rewritten - https://en.m.wikipedia.org/wiki/Schedular_system_of_taxation
    • DWPsnitch
    • By DWPsnitch 6th Aug 18, 3:39 PM
    • 4 Posts
    • 1 Thanks
    DWPsnitch
    When taking on directorship of a company of which you only get paid by dividend if the trading is good then you are self employed and you will need to fill out a self assessment each year. If you wanted to to claim housing benefit as a director then you would need to get employment insurance and employ yourself within the business, Directorship alone doesn't count. You will need to be noted on the accounts as an expense to the business. This will entitle you to minimum wage so you can take yourself to court for low pay
    • prowla
    • By prowla 6th Aug 18, 3:47 PM
    • 9,986 Posts
    • 8,152 Thanks
    prowla
    If your are employee of a limited company then you are not self-employed.


    If you are doing work for that company, you should be taking some salary and not only paying yourself by dividends.


    (The salary can be small.)
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