Marriage is over now he's cutting me off financially

[Nafnaf]

Hello lovely mumsnetters,

My DH and I are separating. We are having a sit down tonight to talk through immediate living arrangements. We have 1 DS (16 months) and he has 2 DC from first marriage (with us e.o.w). I work part time and he is a freelance agency worker. He has his own limited company, from which he pays himself a small salary and receives dividends from. He was also paying me a salary and dividends from the business, however with some digging I've found out he's stopped these, but hasn't told me.

My question is, how much would be fair for him to contribute towards the household bills while we both sort ourselves out? Up until now I've been paying all of my money into the joint account to cover bills and had about £100 left in my personal account for clothes/hair cut "me" stuff essentially. Now he's stopped my salary from the business i wont have any spare cash if i pay 50% of the bills. Can i ask him to pay more than 50% while we still live in the same house?

I'm planning on making a claim for WTC and anything else i'm entitled to. Have no idea how much ill get, which makes planning for the future incredibly hard. Any experience of making claims greatly appreciated....

[NameChange30]

What is the total of his salary and dividends? How does that compare to your part time salary?

Usually couples contribute according to what they can afford, so if he earns more he should be contributing more. That should have been the case when you were married and should remain the case while you are separated but still living together.

Have you had any legal advice about the separation? If not I suggest you get some ASAP. If money is tight you could start by calling the free Rights of Women family law helpline, or asking your local CAB for a list of family law solicitors that offer a free initial consultation.

[NameChange30]

PS CAB can advise on how to claim WTC and any other benefits you may be entitled to as well.

[Joysmum]

He can't just stop paying you wages and dividends if you are classed as an employee/director of the company in order to qualify for these as you have in the past. You need to seek legal advice.

[Cabrinha]

I would suggest that he at least needs to pay you a month's salary /dividends in lieu of notice, as he's ceasing your "employment" instead if just cutting it off.

My advice on what is fair is that whilst you are both under the same roof whilst sorting out longer term financial decisions, you should continue with whatever your current arrangements are.

And if he doesn't want to do that, he might like to go and read HMRC's S660A guidance notes on tax fiddles - if this has been an uncommercial agreement and you haven't actually done any work for this business (or have been obviously overpaid for what you have done).

[Cabrinha]

And YY to Joysmum that he can't just stop paying you.

Sounds like he wants to have his cake and eat it - by which I mean he wants to switch from fucking over the taxman to fucking over you.

[Nafnaf]

His take home is over 50k pa. However we've been putting any spare money into savings (deposit for a house). So i've been happy to cover the majority of the household stuff. However, i just can't afford it to do it anymore. My part time salary is around 14k pa.

I got some legal advice WRT savings. Was advised the only way to stop him spending the money was to initiate divorce proceedings. It seems way to soon for that, I don't want to rush into that, but at the same time I need to protect the money for my DC future.

[NameChange30]

Is the savings account in joint names or his name only?

I can financial abuse alarm bells ringing.

He earns more than 3 times what you do. He should have been paying at least 75% towards mortgage/rent, bills and household expenses.

[Cabrinha]

Oh I would rush into it!
The process isn't that fast if you need to reflect during it.
But this is a man whose first response to discussion is to stop your salary.
Protect yourself.

[NameChange30]

I can hear

How much is in the savings account?

[Nafnaf]

Thanks for all the replies.

Savings accounts are a mixure of mine, his and joint. I think we have about half each, but i can't find any recent statements for his. I know hes had a dividend payment in the last few weeks, not sure where its gone though.

I think i'll see how tonight goes. I'll let him lead the conversation and see what he's expecting to happen. I was hoping if he is going to stop my salary he'll start covering more than half of the joint bills.

Does anyone know if i can claim wtc while we are separated but still living together?

[venusandmars]

If you are being paid wages then you are an employee or director of the company and he cannot stop paying you without formally terminating your employment (and giving you notice of that). Do you have a contract of employment which sets out your duties, salary and your notice period?

If you are being paid dividends then you are also a shareholder of the company. If your h has kept his accounts correctly then you will have at some stage 'invested' at least £1 to buy a share of the company. You are therefore a part owner, and it is difficult for your h to force you to sell your share back to him. Depending of the class of shareholding he may chose to pay you a different dividend from the level he receives, but he should have clear notes - from a Board Meeting - to support every decision.

I suspect that he has been paying you as an employee / director as a convenient way of taking money out of the company without paying tax on it, and has also allocated a shares to you, to pay you a dividend on a similar basis. You need to get some proper advice on your situation because if this is the case you could both be in trouble with HMRC.

[venusandmars]

If you've been paid as an employee and also as a shareholder as a way of avoiding tax, do you think it is right to claim tax credits?

[Cabrinha]

If I were you I'd keep my powder dry tonight.
Don't bring up the salary until you are clear where you stand - you don't want to trigger him to start hiding documents.
Let him talk.
Agree to nothing, telling him you need to let it sink in, to think about it.
Suggest that whilst you are working things out, you just continue as you always have.

And get your arse to a solicitor TOMORROW.

Anyone else want to bet that the recent dividend he paid himself was larger than usual and designed to take money out of the business that you are also a shareholder in?

Copy every document that you can, and go to a solicitor ASAP before you get shafted.

Were you aware that you were evading tax previously? (at least - it sounds like it - you haven't corrected us and said that you actually worked for the company)

[venusandmars]

Sorry, I was clumsy in how I phrased that, I meant that if your husband has been using the wages and dividends payments to you as a way of taking money out of the company without paying tax - does he think it is right to put you in a financial position where you now need to rely on tax credits?

[whatsthatcomingoverthehill]

Cabrinha is spot on. Try not to give anything away or kick up too much of a fuss unless he volunteers it but try and find out what he is doing with the money. He's already shown you what he is like by stopping paying you without telling you. Keep an eye on companies house to see if he's started up any new companies in case he tries to cut you out of the old one.

[NameChange30]

Was it a mutual decision to separate or did he decide? Just wondering, as your attitude seems passive (wanting to follow his lead and not wanting to initiate divorce proceedings).

From what he's done so far I think he intends to screw you over financially and he will succeed if you don't get legal advice and follow it ASAP.

I get the impression that he has controlled the finances (maybe he's been controlling in other ways too) and if that's the case it's vitally important that you find out as much as you can. Look for paperwork (bank statements, business paperwork) while he's out at work.

Tonight it would be wise to listen but not agree to anything, say you need time to think. If necessary you could play the "it's a lot to take in" card. But you absolutely need legal advice before you agree to anything. (I suspect you will be pleasantly surprised by how much you are legally entitled to.)

See what he says tonight, then talk to Rights of Women and CAB tomorrow.

[NameChange30]

Why have you started several threads about the same thing in different places, including this identical thread today?

I suggest you stick to one thread, it's less confusing for you and those of us replying.

[Joysmum]

Cabrinha has given excellent advice. Keep your mouth shut, let him do the talking and treat tonight as a fact finding mission on his opinion/wishes.

Only offer an opinion when you know where you stand legally.

Thus isn't just about your rights to income, it's about providing for your children so play your cards close to your chest.

[Cabrinha]

Ah, so it's clear in your other thread that you don't work for his company.
So it's not "for tax reasons" as you put there, but more correctly "for tax evasion".
Somewhat taking the piss to now want tax credits, no?

My advice about saying nothing and seeing a solicitor stands though.

[Nafnaf]

Ah sorry it seems I haven't worded things very well. I pay tax on my salary from the business and on my main job. The reason I get a salary is to help boost my income for our mortgage application and to help our cash flow while I was on Mat leave.It's all genuine and no tax evasion is happening.

I started another thread because I remembered (after posting) that the lone parents board doesn't get much traffic and i really needed some advice today.

I appreciate all your replies, thank you.

[NameChange30]

For future reference, you can get threads moved instead of starting duplicates in other places.

Unfortunately the reasons you have given for your husband paying you a salary from his business do not make it genuine. It's common sense really that if you have not done any work for the business you should not be paid a salary from it. Your husband pays himself a salary and dividends and if he wanted to increase the household income he could have increased his salary and dividends (paying the necessary tax on those things) and shared that income with you. He may have told you it was all above board and not to avoid tax, but avoiding tax was exactly what he was doing. The rules on this are quite complex and he should have got advice from a company accountant and/or lawyer. Maybe he has stopped paying you the salary because he got legal advice about the separation/divorce and now wants to keep as much money to himself as possible and/r avoid being done for tax avoidance.

[Nafnaf]

Ah ok. It seems I've been naive trusting / leaving him to sort out the business. Inadvertently he's done me a favour by stopping my salary and putting some distance between me and the business. It doesn't however help me out petrol in my car for the rest of the month.

I'm gonna take your advice, keep it under my hat for tonight discussion and avoid giving him the chance to scurry away any money. He'll be home soon. I'll let check-in later and let you know how it goes.

[NameChange30]

Given that you have no money in your own account, could you transfer some money from the joint account back into yours?

[Bogeyface]

Taking dividends to minimise tax is perfectly legal and if the OP has helped him run the business then she is entitled to a salary for that, and for dividends if she is a shareholder. And it is completely irrelevant to what she asked so I fail to see why people are focusing on the moral position of her then claiming WTC. She pays tax on her salary and is just as entitled to claim it as anyone else.

OP, I too suspect that a shakedown is in the offing and you need to be very careful. Get as many documents relating to the business as you can including the most up to date accounts you can get your hands on, and the last 5 years accounts. Also, as much bank info as you can get for both you and him if you can, and lodge all of this with a solicitor. Then if money starts disappearing you have proof that it was there and that he is hiding it.

[Bogeyface]

Also, if you are still a shareholder in the business, dont sign that away. It gives you a fair amount of power. You are entitled to see accounts, cash flow etc which you wouldnt be if you signed it back to him. If he wants you out of the business then you could negotiate him buying you out, but dont give it up for nothing.