Tax credits and starting a ltd company

Discussion in 'General Business Forum' started by bubabell, Nov 6, 2011.

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  1. bubabell

    bubabell UKBF Newcomer Free Member

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    Hi

    I need some advice! I'm setting up a limited company soon and would like to be able to claim working/child tax credits as its going to be a real struggle without my current salary (im giving up work).

    I understand that I will need to pay myself the minimum wage in order to be eligible for tax credits?

    The problem is, I will be working full time on the business but actually can only afford to pay myself around £200 a month (less than the minimum wage!).

    So what should I do? Is there a way around this in order to be eligible?

    I'd appreciate any help you have as I'm struggling!

    Thanks.
     
    Posted: Nov 6, 2011 By: bubabell Member since: Nov 6, 2011
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  2. TotallySport

    TotallySport UKBF Legend Full Member - Verified Business

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    Can we ask what business your trying to setup?
     
    Posted: Nov 6, 2011 By: TotallySport Member since: Jul 18, 2007
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  3. monitor185

    monitor185 UKBF Newcomer Free Member

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    This year I was employed, made redundant and set up as a sole trader straight awayand am currently claiming working tax credits. It was pretty simple to do:

    1.Calculated PAYE (employed) earnings for year from April to date of end of employment

    2.Calculated what I estimated self employment earnings would be for remainder of the tax year

    Basically put these figures on the Tax credit forms and HMRC worked out Tax credit payments based on them.

    I appreciate that you plan to set up a Ltd Company and I think it is still possible but more complex.

    Hope this helps a little.
     
    Posted: Nov 6, 2011 By: monitor185 Member since: Apr 27, 2011
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  4. bubabell

    bubabell UKBF Newcomer Free Member

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    Thanks v much. Perhaps I should start as a sole trader until
    I get my feet off the ground. I think it would be simpler when it comes to tax credits!
     
    Posted: Nov 6, 2011 By: bubabell Member since: Nov 6, 2011
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  5. TotallySport

    TotallySport UKBF Legend Full Member - Verified Business

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    it would be easier if you trade while working and see if it takes off, but since you didn't answer the question it makes it hard to say.
     
    Posted: Nov 6, 2011 By: TotallySport Member since: Jul 18, 2007
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  6. Mpg

    Mpg UKBF Ace Free Member

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    I didn't think directors HAD to be paid minimum wage.


    http://www.direct.gov.uk/en/Employment/Employees/TheNationalMinimumWage/DG_175114
     
    Last edited: Nov 7, 2011
    Posted: Nov 7, 2011 By: Mpg Member since: Aug 18, 2009
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  7. Truemanbrown

    Truemanbrown UKBF Newcomer Free Member

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    If you are self employed then you will need to place an estimate in your tax credit form.

    When you finalise your first set of accounts and the results known, if your profits, per the tax credit form, are overstated you will need to send the info to HMRC in order to obtain further credits.

    If your total income is understated, HMRC will disregard it unless it is understated by more than £10,000.
     
    Posted: Nov 7, 2011 By: Truemanbrown Member since: Jul 23, 2010
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  8. bubabell

    bubabell UKBF Newcomer Free Member

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    Hiya Truemanbrown

    Thanks for that info, I've claimed tax credits in the past and know a bit about them. I've claimed them as an employee when I was on matenity leave.

    Do you know whether I could claim tax credits as a limited company?

    Thanks, Isabel.
     
    Posted: Nov 7, 2011 By: bubabell Member since: Nov 6, 2011
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  9. MyAccountantOnline

    MyAccountantOnline UKBF Legend Full Member

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    This is a really popular question and I think you'll find this thread is just what you need - http://www.ukbusinessforums.co.uk/forums/showthread.php?t=228869
     
    Posted: Nov 7, 2011 By: MyAccountantOnline Member since: Sep 24, 2008
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