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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

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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:

Bunnyjo · 10/02/2011 18:06

DH was self employed and paid himself a salary and dividends to the tune of much less than £80k and we were not entitled to TC (nor would we have claimed them). Your benefit entitlement is based on your total previous years income - including salary, dividends, share payouts, household assets and savings (not including your main home, but it does include any child savings over the value of £3000), maintenance payments, household savings etc.

I very much doubt that you would be entitled to claim anything, in all honesty, and I do think YABVU to consider doing so - especially as you state 'Clearly, I don't need this money'

HecateQueenOfWitches · 10/02/2011 18:07

Quite, curlymama. It gives you the flexibility you need when running a small business.

You have a small salary - a survival budget, basically. Then, at the end of the year, you make it up. If you've done well you get more than if things have been tight.

Far more sensible than paying yourself a big salary that might impact on your operations if times are lean.

CharlieBoo · 10/02/2011 18:08

Tax credits are based on your entire household income. A dividend is an income whether it's taxed or not. On TC forms you need to give ALL your income details as a family. If you don't give details of all your income correctly and you claim based on 25k earnings (when you actually get 80k) you will be claiming money you are not entitled to and that is an illegal. I used to work for CAB - believe me this is the case.

FranRychel · 10/02/2011 18:18

I struggle, even with TC to pay mortgage and bills etc each month... I just wish I was in a position where getting £500 TC was "rainy day" money. To us - £500 would mean not having to live on beans on toast at the end of each month when we run out of cash!! lol

Having said that, if I was in your position, I would probably put it away for LO going to uni or something...

GypsyMoth · 10/02/2011 18:20

thought so Charlie.......curiousjorgina perhaps isnt quite so curious!! she doesnt appear to have come back to her own thread to find out...

reelingintheyears · 10/02/2011 18:33

Just got back here and thought the same thing ILoveTIFFANY.

WHERE'S SHE GONE ?

mrsgetonwithit · 10/02/2011 19:40

bunnyjo

I dont think it includes savings or childs savings, it never has a box for this on the form.

Am I wrong?

Original poster

CuriousJorgina · 10/02/2011 19:56

curlymama - that was my thinking.

It's very tempting but if we were to make a mistake and sod it all up it's far more hassle than it's worth.

I don't know anything about it until my friend mentioned it and had always assumed we wouldn't qualify for anything like that and it does seem mad that we might.

Thanks for the feedback - less so to those that were so nasty.

OP posts:

Chil1234 · 10/02/2011 20:26

Ask a stupid question....

woollyideas · 10/02/2011 20:28

How could you even think about claiming?

veganette · 10/02/2011 20:29

You're not entitled to the benefits, you would be cheating the state by claiming them as your income is too high. Stealing, actually.

mollymole · 10/02/2011 20:30

dividends count as income
can you not manage on your already generous income ?

LynetteScavo · 10/02/2011 20:38

TBH, once you have declared both your incomes I doubt very much you would get any where near £500 pm.

The only way you will know how much you can receive is to put in an honest claim and find out. You will have to declare the dividends(or any potential dividend. What I expect this will mean for tax credits is that they will pay you a bit, and then decide you have been over paid, and either ask you to pay it back or stop future payments.

I would imagine your friends business isn't doing as well as yours if she's getting £500pm, and I expect also that she is declared as working for the business.

YouRmysunshine · 10/02/2011 20:51

This is so blatantly a windup - we get about £500 a month in tax credits and i feel really guilty about it, it is about to go down significantly, because my DP earnt 13K last year, yes, 13 not 130.

As for taking a wage out of the business as a divident to avoid tax - ugghhh

BENEFIT FRAUD AND TAX EVASION (even if the tax evasion is semi legal, you'll pay it eventually)

Some people eh

AnnMarlow · 10/02/2011 20:59

Even if dividends didn't count as income (which obvously they do) I fail to see how £25k would equate to £500 a month in tax credits.

Paying small salary and taking the rest in dividends is perfectly above board though. And dividends are taxed. At a lower rate but still the tax on £55k of dividends is still quite a bit.

Think it is a wind up though - careful placement of "friends at our local NCT group" makes me feel all is not quite as it seems.

AnnMarlow · 10/02/2011 21:12

Had a quick look at a benefit checker and if it were £25k then there would be about £450 a year. And that is mainly due to it being a child under 1.

susiedaisy · 10/02/2011 21:12

i think this post is a crock of shit, you wont get TC if you earn anywhere near that amount and a dividend is an income which you will pay some tax on, if it was that easy we'd all be doing it (wouldnt we?) as a (recently become)single parent on an income of eight thousand a year and TC to make it up to just about a livable amount i would find it offensive to meet someone like this, and i wouldnt hesitate to dob on her!

porcamiseria · 10/02/2011 21:16

they wont give you that much!!! we get 85 a month

anyhpow if you are completely honest about earnings, and you have to declare everything...you prob wont get much anyway

I see it as a reduction in the large amount of tax I pay

tiredemma · 10/02/2011 21:20

you sure your friend didnt mean £500 a year???

huddspur · 10/02/2011 21:22

If you qualify then you might as well boost the household income.

HowAnnoying · 10/02/2011 21:23

Someone I know is self employed and became limited so they could pay themselves a minimum wage and collect the rest in dividends, they told my DP that it means they can claim maximum tax credits, I thought they must be either lying to DP or lying to the tax credit office.

You will only recieve tax credits if you lie on the form. Which your friend must be doing.

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