Tax Credits and Proof of Employment

Discussion in 'Accounts & Finance' started by anonuk, Jan 12, 2018.

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  1. anonuk

    anonuk UKBF Regular Free Member

    302 44
    Since around February 2016, my limited company has been mine and my wife’s only form of work. We are the only two directors and I work for the company full time and my wife works 16 hours a week.

    We’ve never had employment contracts as we don’t want to have to pay ourselves minimum wage.

    My ‘wage’ of £500 per month goes straight into a directors loan account until the company gets to a point where it can pay me and my wife doesn’t currently receive a wage.

    We’ve now had a letter from tax credits saying that they have no record of us either of us working for the company and have asked us to prove it basically, with wage slips, etc. The problem is, my wife doesn’t get wage slips because she doesn’t get paid and I’ve never bothered with a wage slip as never needed one.

    I was just wondering if anyone else has been challenged by tax credits and successfully argued your case?

    Any help/advice would be hugely appreciated.
    Posted: Jan 12, 2018 By: anonuk Member since: Feb 27, 2014
  2. DavidWH

    DavidWH UKBF Enthusiast Free Member

    1,651 316
    Regardless of whether you actually take the money from your business into your account, or transfer it to the DLA, you will probably need to be 'employed' on a PAYE basis and complete the necessary filing with HMRC.

    I am sure someone else will be along shortly to clarify.
    Posted: Jan 12, 2018 By: DavidWH Member since: Feb 15, 2011
  3. BustersDogs

    BustersDogs UKBF Ace Free Member

    1,359 253
    If your business can't afford to pay you for two years, then you don't have a business, you have a hobby. And therefore I'm not sure that tax credits should be paying your bills while you indulge yourself in the luxury of spending your days doing your hobby. :-/
    Posted: Jan 12, 2018 By: BustersDogs Member since: Jun 7, 2011
  4. Mr D

    Mr D UKBF Legend Free Member

    25,409 3,100

    No he has a business.
    Just not paying himself out from it - there is a difference.

    Tax credits like to see income details so provide the payslips - can be done on computer in minutes. 500 pounds for you and none for the wife.
    They may adjust the tax credits award.

    Be warned, once you switch over to universal credit (as all tax credits claims will) then after 6 months the minimum income floor kicks in.
    You will be classed as earning at least minimum wage for the hours you declare yourself working even if you are not paying that.
    Knocking plenty of self employed and company directors off benefits entirely.
    Posted: Jan 12, 2018 By: Mr D Member since: Feb 12, 2017
  5. justintime

    justintime UKBF Regular Free Member

    596 80
    If you're paying yourself more than £113 a week then you need to be registered for PAYE. Each month you send HMRC a submission from your payroll software and HMRC update tax credits.
    Posted: Jan 15, 2018 By: justintime Member since: Apr 12, 2009
  6. Newchodge

    Newchodge UKBF Big Shot Free Member

    14,718 3,944
    What do you both live on?
    Posted: Jan 15, 2018 By: Newchodge Member since: Nov 8, 2012
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