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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

in claiming tax credits?

71 replies

CuriousJorgina · 10/02/2011 16:46

Should we all claim the benefits to which we are entitled? Or should we ignore them if we don't 'need' them?

I'm just finishing maternity leave and will not be going back to work.

Have heard from friends at our local NCT group that I might be eligible for around £500 a month in TCs.

Thing is, my OH earns around £80k a year, but only pays himself £25k or so, so as not to pay tax at the higher rate. The remainder is paid in dividends which are taxed at a lower rate (about 18%, I think).

One of my friends is in the same boat, and has been getting around £500 a month which all gets saved away for a rainy day etc.

Clearly, I don't need this money but, of course, it would be nice.

Thoughts?

OP posts:
MrSpoc · 10/02/2011 16:47

if you are entitled to them claim. do not feel guilty you have paid enough in taxes.

Ben10isthespawnofthedevil · 10/02/2011 16:49

What do you think? Are you entitled to claim?

I think the fact that you are posting means that you know that it is not right.

BeerTricksPotter · 10/02/2011 16:50

This reply has been deleted

Message withdrawn at poster's request.

EricNorthmansMistress · 10/02/2011 16:50

'Thing is, my OH earns around £80k a year, but only pays himself £25k or so, so as not to pay tax at the higher rate.'

Don't you bloody dare claim tax credits. You are not entitled to them, you only are because your DP fiddles the system.

vj32 · 10/02/2011 16:52

According to the internet you are not entitled to anything - dividends count as income therefore your husband earns too much. You could claim if you like - they can only say no after all.

MorticiaAddams · 10/02/2011 16:52

Surely dividends count too. Perhaps your friend hasn't told anyone about them.

BeerTricksPotter · 10/02/2011 16:52

This reply has been deleted

Message withdrawn at poster's request.

vj32 · 10/02/2011 16:53

Its here if you want to look:
www.direct.gov.uk/en/MoneyTaxAndBenefits/TaxCreditsandChildBenefit/TaxCredits/Gettingstarted/Claimingtaxcredits/workoutincomeandworkinghours/DG_174155

Only the first £300 of non-earned income is discounted.

MrSpoc · 10/02/2011 16:54

oohps i never saw that he earns that much. in that case do not claim.

GypsyMoth · 10/02/2011 16:54

tax fiddling/evasion......and telling us all about it!!? Love it!!Hmm

reelingintheyears · 10/02/2011 16:55

Load of old BOLLOCKS.

We get TCs and my DP doesn't earn £25k.
And we don't get anywhere near £500 pm.

BeerTricksPotter · 10/02/2011 16:55

This reply has been deleted

Message withdrawn at poster's request.

HecateQueenOfWitches · 10/02/2011 16:55

Well. It is perfectly legal to choose to pay yourself a minimum salary and then take a dividend at the end of the year.

There is no fiddling going on. No unlawful activity of any kind.

However, I wouldn't claim tax credits no. Because although it is perfectly legal, it is a bit of a 'fiddle' and you are actually getting much more.

Does he do the company car etc stuff as well?

coatgate · 10/02/2011 16:56

Surely you would have to declare your DH's dividends on any claim. We are in this position, in that we have our own business, take a small salary and the rest in dividends, but our total income is sometimes around £90K a year and I don't imagine for one minute that I would be able to claim any tax credits.

pascoe28 · 10/02/2011 16:56

I think we all have a duty (to our families) to pay as little tax as possible, so what you are proposing is sound financial sense.

However, it makes a mockery of the welfare state and is yet more evidence of the raping of this country that GB and TB did in their years in office - bribing the middle classes with their own money.

amothersplaceisinthewrong · 10/02/2011 16:56

Dividends count - I know this because my Dh and I have our own limited company and pay ourselves this way. Can't work out why your DH can payhimelf £55K in divis and not pay any HR tax though, unless some of the divis are actually paid to you as a shareholders

HecateQueenOfWitches · 10/02/2011 16:57

perfectly legal to claim tc based on your salary if you qualify based on your salary, I mean.

I don't know how dividends affect tc.

pascoe28 · 10/02/2011 16:57

ILoveTiffany - I think the point is that this is tax avoidance = legal...not tax evasion = illegal.

You do understand the difference, don't you?

sunndydays · 10/02/2011 16:58

£80,000 a year?! And you don't pay tax on most of that? But you want the government to give you money for a rainy day?

Tax credits are money to help people survive, pay bills, buy food etc not to boost their savings account

GypsyMoth · 10/02/2011 16:58

sounds dodgy to me!!

GypsyMoth · 10/02/2011 16:59

thinnest of thin lines Pascoe,the thinnest!!!

EricNorthmansMistress · 10/02/2011 16:59

tax avoidance might be legal but it's not moral. Claiming state money when you are actually in receipt of £80k gross per year on the basis that you pretend to only earn £25k is massively immoral.

HecateQueenOfWitches · 10/02/2011 17:00

It's really not, tiff.

You are allowed to give youself a small salary and then pay yourself dividends based on profit.

It is, I assure you, a perfectly legal thing to do.

amothersplaceisinthewrong · 10/02/2011 17:00

TCS are decided on TOTAL HOUSEHOLD INCOME, whether that be salary, dividends, bank interest, it all has to be included on the form. Therefore the OP will get nothing.

coatgate · 10/02/2011 17:02

We still pay tax on the dividends.

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