Setting up an Ltd while unemployed

oscare

Free Member
Aug 6, 2009
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I was laid off during the crisis and decided to set up a ltd. I am claiming unemployment benefit in the meantime. Now that the company is positive can I get some dividends from the company whilst I am claiming the benefit? Or I would need to registered myself as employee (even with a minimum salary) to withdraw dividends? I want to make sure I am ok and not to have problems or penalties fromthe tax inspector. Thanks,
 

oscare

Free Member
Aug 6, 2009
14
0
It is meant to be a second income and i am actively looking for a job as I cannot survive with the 60 pounds a week benefit nor with the income from the import/export company I have set up. Just started trading. I am wondering if I should leave the benefit for not incurring in problems as it's not my intention to have any.
 
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I think you should have come off JSA and started to claim working tax credits, whilst you worked at putting your business together.

The minimum you need to be working to claim WTC is 16 a week.

I would be very very careful (how long have you been trading)?

Did you tell anyone whilst you were signing on - that you were hoping to work for yourself? I would have thought they might have pointed you in the right direction if so.

If you get caught you will be in trouble - and saying 'I did not mean to do it' will not cut any ice.

Ask you local Citizens Advice for further information if you need to clarrify your situation. Its free and confidentail.

Are you single or do you have a family? As all of this gets taken into account with WTC.

Please do not chance it any longer.

Poppy
 
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elaine@cheapaccounting

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    Nov 4, 2005
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    It is meant to be a second income and i am actively looking for a job as I cannot survive with the 60 pounds a week benefit nor with the income from the import/export company I have set up. Just started trading. I am wondering if I should leave the benefit for not incurring in problems as it's not my intention to have any.

    I thought you had to declare that you were not working to receive benefits? Mind you it is years since I had any experience of this - going back to when I was a student.

    I can appreciated that it is hard to survive on benefits etc.

    However i should have thought that it would be harder if this were stopped due to an incorrect or fraudulent claim.

    Does the business have a chance of being successful if you work on it full time?
     
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    J

    JamesCartwright

    Dividends are different to taking a salary - you take dividends through your shares and do not need to be employed by the company to take dividends. However, you may be an employee of the company if you are a director (and then could be paid a salary).

    There may also be tax advantages to taking a dividend instead of a salary - see these links for more information:
    - http://www.whitingandpartners.co.uk/content/company_v_sole_trader_tax_comparison.htm
    - http://www.contracteye.co.uk/dividends_tax_pay.shtml

    (It can be a bit complicated, and so you may want advice from an accountant).

    It may be a good idea to ask at the Jobcentre if you're allowed to work as a director of your own company, but I expect that it's only one or the other.

    Hope this helps.

    James.
     
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    I want to make sure I am ok and not to have problems or penalties fromthe tax inspector. Thanks,

    To claim unemployment benefit you have to be actively looking for work and not employed elsewhere, earning or not. I think there are some provisions for working some hours but I'd guess it would be very complicated.

    Technically, I think you can claim income support instead and if you are renting your house you can claim rent benefit, as well as council tax benefit.
    This might be a better route if you don't expect to earn a lot in the next few months.

    The problem will be switching from one to the other without becoming a victim of whatever anti-fraud scheme is running at the moment. You'll also have to answer a lot of questions and fill in a million forms.

    The benefit system is simple if you intend to live on it - for people who need a bit of a leg-up or a safety net, it's a lot more complicated.

    Maybe it ought to be the other way round?
     
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    To claim unemployment benefit you have to be actively looking for work and not employed elsewhere, earning or not. I think there are some provisions for working some hours but I'd guess it would be very complicated.

    Technically, I think you can claim income support instead and if you are renting your house you can claim rent benefit, as well as council tax benefit.
    This might be a better route if you don't expect to earn a lot in the next few months.

    The problem will be switching from one to the other without becoming a victim of whatever anti-fraud scheme is running at the moment. You'll also have to answer a lot of questions and fill in a million forms.

    The benefit system is simple if you intend to live on it - for people who need a bit of a leg-up or a safety net, it's a lot more complicated.

    Maybe it ought to be the other way round?

    I think you can work whilst claiming JSA (but they only take it off the amount you receive). So you would be no better off in the end.

    Poppy
     
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    elaine@cheapaccounting

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    To claim unemployment benefit you have to be actively looking for work and not employed elsewhere, earning or not. I think there are some provisions for working some hours but I'd guess it would be very complicated.

    Technically, I think you can claim income support instead and if you are renting your house you can claim rent benefit, as well as council tax benefit.
    This might be a better route if you don't expect to earn a lot in the next few months.

    The problem will be switching from one to the other without becoming a victim of whatever anti-fraud scheme is running at the moment. You'll also have to answer a lot of questions and fill in a million forms.

    The benefit system is simple if you intend to live on it - for people who need a bit of a leg-up or a safety net, it's a lot more complicated.

    Maybe it ought to be the other way round?

    Again not my area - but I remember that you had to declare income received years ago. Dividends would be income. And there were rules like if you had £x in savings etc you couldn't claim.

    Can anyone enlighten me as to the rules these days please?
     
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    JSA Allowance the does and dont's! - the short version!!:eek:


    The type and amount of Jobseekers Allowance you may qualify for depends on your circumstances. The options are as follows:
    You may qualify for Jobseeker's Allowance (Contribution based) if you are unemployed, have paid enough National Insurance Contributions and are available for and actively seeking work.
    It is payable for up to 182 days. No additional benefit is payable for dependants.
    Jobseeker's Allowance (Income based) is income related. You may qualify for Jobseeker's Allowance (Income Based) if you are unemployed, available for and actively seeking work but have not paid enough National Insurance Contributions to receive Jobseeker's Allowance (Contribution based).
    The rates payable depend on your circumstances.​



    Joint Claims for Jobseeker's Allowance (Income Based) was introduced as part of the Government's Welfare to Work reforms. It aims to:
    • reduce the number of households where currently no one works by requiring both members of a couple to look for work or training
    • help you, if you are working part time, to increase your hours or improve your employment prospects.
    Both members of a couple satisfying certain criteria will be required to be available for work as a condition of receiving Jobseeker's Allowance (Income Based).​



    You can get advice on all aspects of Jobseekers Allowance at the Social Security or Jobs & Benefits office.​




    Jobseeker's Allowance is paid to unemployed people.​


    Income Support can be paid for persons who are in the following categories:​


    • A Lone Parent with a child under 12 living with them (from october 2009 this will become a child under 10);
    • Caring for a severely disabled person or a member of their family who is temporarily ill;
    • A Disabled person whose earnings are reduced because of their disability;
    • A Student (who qualifies for Benefit);
    • Pregnant within 11 weeks of the expected date of confinement; and
    • People aged 60 and over.
    An unemployed person will be entitled to a Jobseeker's Allowance if they:​
    • are available for employment; and
    • have entered into a Jobseeker's agreement; and
    • are actively seeking employment; and
    • satisfy the contribution-based conditions or the income-based conditions; and
    • are not engaged in full-time paid work; and
    • are capable of work; and
    • are not receiving relevant education; and
    • are under pension age; and
    • are in Northern Ireland.
    In certain cases both members of a couple will have to claim Jobseeker’s Allowance and meet these conditions. See Jobseeker's Allowance - Joint Claims for more information.​



    To qualify for Jobseeker's Allowance you must be unemployed or working on average less than 16 hours a week.


    If you work part-time, the first £5.00, £10.00, or £20.00 of your earnings (net of Income Tax, National Insurance and half of any pension fund contribution) is disregarded in assessing your claim to Jobseekers Allowance.​


    The standard disregard on part-time earnings is £5.00 a week, but a higher £20.00 disregard is applied to the following groups:​
     
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    If you are claimimg JSA and have a mortgage they will also cover the 'Interest' only on your property up to a certain amount.

    Your payments might be reduced if you receive income from part-time employment. You'll get less if you have savings over £6,000. If you have savings over £16,000 you probably won't qualify.

    It is all down to what type of JSA you are claiming

    Income based or contribution based!

    Poppy
     
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    oscare

    Free Member
    Aug 6, 2009
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    Well, no savings and loads of credit card bills. I also have a mortgage which I am paying but in another country, could you please send me the link where i can find some info on the mortgage allowance? And many thanks you all for your help.
     
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    Zeno

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    Jun 12, 2008
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    So maybe I am ok ...and not illegal or a fraudster?

    That depends on how many hours a week you work for your own company.

    I will admit I have very little understanding how all this hangs together though. The system does not seem to cope very well with people who have their own companies.

    Every shareholder of a limited company gets a different answer on their entitlement to working tax credits for example.
     
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    elaine@cheapaccounting

    Business Member
  • Business Listing
    Nov 4, 2005
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    I suppose it depends on the definition of working for benefits claims.

    E.g. if you are running a company does it mean you are working? Even if the remuneration is dividends and not a salary. Or are you only working if you receive a salary?

    What happens for example if you do some voluntary work?

    Oh to have a clear set of rules :rolleyes:
     
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    Jenni384

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  • Oct 1, 2007
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    I *think* voluntary work counts as working for JSA. I'd guess it didn't for WTC though!!

    With regards the OP, I think if he's working under 16 hours he is entitled to JSA (no remuneration = no cut in benefits). If he is working over 16 hours, no entitlement to JSA, but can get WTC instead. From my last reading of the WTC vs NMW debate, I don't think it matters if there are no remunerations from the company; however if the company could afford to pay remunerations I believe there are anti-avoidance provisions in place for this. If there's no profit in the company because it's being reinvested then I don't think there's any problem here.

    But... I don't know for definite! :)

    Oh to have a clear set of rules :rolleyes:

    Quite! :D
     
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    Nottinghamone

    Free Member
    Aug 16, 2010
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    I have paid taxes all my life so I do not feel bad. I am not paying myself or indeed earning anything.

    I have one question the professionals I speak to at the Job Centre can not answer.

    There is a scheme where you get 16 weeks £50 a week grant to set your own business. Now, I have a joint claim so this equated to a £50 a week reduction (how has it come to this!!)

    I have asked the question would I get £100 a week for the next 16 weeks on this setting up your business scheme, or shall I just carry on claiming as I am?

    Thanks for your help!!
     
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