To struggle with self employed friend who declares that income is low to avoid paying tax and get benefits

[ginorwine]

Our old friends are self employed and were saying that they were upset as they may get benefits reduced . They said that they have kept income apparently low - but not really - so that they don't pay tax at all and get credits .
Dh and I were surprised and didn't say anything as taken aback .
He had told us that for a weekend job for eg he earns 800 pounds .
I really like them but this discussion has raised uncomfortable feelings for me .if everyone did this then how would the country run , benefits be paid etc . I find it I consistant with my beliefs that we should all muck in together .of course I know this goes on and at much higher levels . I'm finding it an elephant in the room in our friendship as I find it wrong but they are lovely people . I'm not saying I'm perfect God forbid ! But this feels a deal breaker to me on my moral compass .
Has anyone had an issue with friends which they have found hard ? And did it affect things ? I can't key this affect the friendship yet I feel angry .
It's not that they are trying to make ends meet .they only work couple of days a week . Have relaxed lifestyle it seems but the benefit cut s may alter this .

Violates my moral compass, too.

They aren't doing anything wrong- that's how tax laws work if you're self-employed. Unless you don't have an ISA because you believe it's morally incumbent upon you to pay as much tax as possible, you aren't actually doing anything different.
Having said that, I don't think being in a position where you only need to work two days a week, and still claiming benefits (childcare requirements aside, obv) is admirable. I'm quite about that.

I'm with doob on this one, do they actually declare all their earnings?

It's a real double-edged sword. They certainly won't get a mortgage or certain loans if they claim to earn very little for tax reasons.

As long as they are working legally and within the rules of the system, then they aren't doing anything wrong and it's nothing that most people wouldn't do. Do you volunteer to pay tax on more of your income than you have to?
It's the big businesses who avoid paying millions in tax who I get annoyed with. Most small businesses are just trying to make a living.

Hi this is a duplicate thread - please see this one
Thanks