Mitchy260

If you have your own company and pay yourself the absoloute bare minimum as a wage, will you be able to claim the maximum amount of benefits that are 'legally' entitled to you, no matter how much dividends you pay yourself/anyone else or hold back.

Income falling by £70k - how do I claim tax credits? - MoneySavingExpert.com Forums

This guy earning £80000, but will pretend he's earning £11000 to get £8k worth of free benefits.

If this is the case, our countries benefit system is an absoloute joke. This kind of shi* makes me

spireite

Yepit wouldn t surprise me that its true .

You can probably put your name on the council house waiting list if you live in deeepest darkest africa as well

EddScott

I think he probably could do it but it comes down to the case of whether or not the dividends he chooses not to pay himself should be deemed as "notional income"

I'm currently studying for a Personal Taxation exam in April so I'll see if the book has anything on it.

RussBoy

This is quite ethical to be honest and any good accountant would advise the same sort of MO. Basically, he pays a wage and NI and tax on that wage. He then pays 10% on dividends awarded to himself as well plus he may technically fall into higher tax payer bracket in which case it'll be a lot more. Most company directors do this.

If you think about it, why would he pay a salary and not take a higher dividend? He'd be paying extra tax for the sake of it.

Personally, I don't blame the guy but I don't believe in defrauding or trying to swindle the system through illegal means though.

**amended to say: I believe dividends and 'other' income form part of the income used to judge whether you are entitled to benefits etc so I guess what this guy is trying to do is defraud, which obviously is a pisser for all of us decent tax payers. He'll be stupid though as such a fall in salary and claiming of benefits will set alarm bells ringing at HMRC.

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iTrader: (41)

Nothing new as far as I am aware, at least he's working ! Far worse things are done by accountants

MattW

Basically the money is owned by the company until a dividend is paid, in then becomes personal income and is taxable. Perfectly legit.

Mitchy260

Its not that, its the claim for all the benefits under the sun by being classed as a low earner

Im sure there's something in there about holding back your income to gain benefits

PeteBrant

I remain to be convinced that delibertainly paying yourself a low wage and deferring dividends to a later date in order to get tax credits is in any way "ethical".

borat52

I also am not convinced of this, but its legal and as such good luck to you if you can benefit from it. It makes a nice change to see money given back to hard working law abiding citizens.

PeteBrant

Wha?

So benefit fraud is ok if you are law abiding (sic) and hardworking, but not if you aren't

EddScott

So if he goes from income and divi of £80K to income of 11 plus 8 benefits - how does that work.

He isn't going to pay himself divi. I get paying a low income plus divi to keep your tax rate low (even then you can't drive a brand new audi and claim you only earn £500 a month - they won't have that)

Even with the benefit how can he manage if before he was paying himself 80K to only receive a maximum of 19K.

Do they ask about saving when completing the benefit forms? Would have thought he has investments being on 80K a year.

I never look. We earn relatively bugger all and most years we are paying them back