WIBU to claim tax credits in this situation?

[dingledangledongle]

I have never had tax credits before. I work part time and earn about £20K before tax. DH was employed in a high earning job (over £100K pa before tax), taking home about £4800 per month.

He then became a partner in his business which is sort a fledgling venture and currently they aren't making a profit. He still gets the same take home monthly 'pay' but this is classed as a director's loan because if the company never gets profitable as far as I understand it, he could have to pay it back. Therefore as far as HMRC are concerned he is self employed earning nothing.

I think if the company does well then he will be taxed on it retrospectively but it will be as if he earnt that in one year - still the tax bill would be big and I think his company are keeping a portion back for this purpose in future if needed.

We live in a big house, bigger than we probably need. Apart from that I don't think we live an extravagant lifestyle but don't count every penny either. We are in overdraft at the end of each month because he earns significantly less than when we bought this house (used to get a big bonus). We have some savings but not loads because we've put a lot into the house.

We have three children (2 at school, 1 not yet). We have one summer holiday and normally go to DH's home country in the winter to see his family.

We stopped receiving child benefits when they changed the criteria to make it means tested. I recently started them again because as I say, my DH is not classed as earning anything.

I then checked and discovered we would be entitled to substantial tax credits, potentially £1000 per month plus.

WIBU to claim this? On one hand it doesn't sit well with me because I feel tax credits are aimed to help people who are struggling to cover the basics. On the other hand, if we have to repay this money, the 'directors loan' he is currently getting, in future, I would wish that I had claimed what we were technically entitled to.

One option is I could claim it and put it in a separate account.
I've had advice from a relative who is a chartered accountant who says there's nothing dodgy about it and if we are entitled to it I should claim it.

What do people think?

@AnotherEmma I think that's pretty much it. But maybe add in, - we seem to be incapable of talking it through and he's not taking on board my questions or concerns? It is f**cking ridiculous that we are overdrawn each month, more and more actually. What can I do other than manage my own money and make sure I have something put by if I ever LTB.

Never heard of 12 grand a year in TCs unless you're the Radfords.

yea thats not correct, my brother gets £900-ish atm. has 3 kids . is exempt from benefits cap as meets the criteria to not get hit by it. (£10800 tax credits, close enough to 12k, without the radfords 21 kids)

"and make sure I have something put by if I ever LTB"

*I didn't mean from tax credits, I get that was a stupid idea.

Have just seen that you earn 20K, more than many other families have.
I also call the bridge dweller here. Nobody who earns 20k would be that thick

It makes me cross that very wealthy people find loophole to avoid tax or claim benefits. Do the right thing. Don’t claim.

What can I do other than manage my own money and make sure I have something put by if I ever LTB.

Separate your finances and refuse to fund his overspending is a much better idea than claim and possibly be socked with a huge claim back from the HMRC for overpayments, or worse.

@SoddingUnicorns

This

You know what OP, do as you please. Personally I hope HMRC unravels all this morally bankrupt money moving and nails the lot of you to the wall.

Claim, don’t claim. But don’t ever kid yourself on that you’re a decent human being abusing a system designed to help people in need, not tax dodgers with a spending problem who think they’re owed money.

Absolutely fucking morally bankrupt.

AGREED & NOTHING TO ADD
Hit the nail on the head!

Which bit am I being thick about? I've tried to be honest about the situation I'm in. I appreciate that I am very well off financially but that doesn't mean I don't have concerns or queries that I want other people's opinions on. I appreciate the perspective and good talking to that I've had here. And I am suitably ashamed of myself for considering it.

“I think that's pretty much it. But maybe add in, - we seem to be incapable of talking it through and he's not taking on board my questions or concerns? It is f**cking ridiculous that we are overdrawn each month, more and more actually. What can I do other than manage my own money and make sure I have something put by if I ever LTB.”

OK so the vast majority of people on this thread are going to give you a bashing for even considering applying for tax credits and they’re not going to understand where your question was coming from.

I suggest that you start a new thread in Relationships and explain the difficulties you have with finances and your husband, the fact that you manage your own money ok but you’re afraid that he’s not managing his, and he’s dismissing your concerns. The amounts are pretty unusual and will lead to some people wondering how on earth you (or perhaps more accurately your husband) could live beyond your means on that income. But in fact the amounts don’t really matter, it’s more the wild differences between your approach and your husband’s, and the fact that you can’t (or he won’t) communicate about it.

Anyway. New thread in Relationships. This one is not going to go well or be helpful.

I’m with @AnotherEmma, leave TC out of it and make a new thread that I’ll steer clear of because my back is up.

OP you need to start a new thread in relationships, your dh not talking or listening are huge red flags.
Do you have any idea how the business is managed and how much money it makes.
e.g Is your home safe or might you find yourselves homeless and bankrupt due to your dh believing he knows what he's doing when it doesn't sound like he does.

Thank you. I have had threads in relationships before over the years but I don't have the emotional energy for that today. I think I know what the advice would be. The past year I have considered LTB but basically things are not at all good but not (yet) bad enough to bail on it. I'll just carry on controlling the things that are under my control.

I was waiting for @stickerrocks to come and comment. She is very knowledgable so please take her advise.

I would also like to add that I had a friend whose husband had taken out a large directors loan before the company went into liquidation. They lost everything, had to declare themselves bankrupt and start all over again.

Oh my love, you shouldn't stay with him because it isn't bad enough to bail. You should only stay if you love his every being.
You would be secure on your salary and claiming and cb for your children.

"And I am suitably ashamed of myself for considering it."
Does no one remember that ad/radio ad that used to run 8 or 9 years ago, put out by hmrc saying "if you're entitled...claim!" (ok, it was pre-austerity/recession) but OP is literally just asking if she can claim what she's entitled to. the answer is, yes. The tax system is unfair, newsflash! Not for OP to feel shame about. If she doesn't want to claim what she's entitled to that's her choice, the moral outrage on here is bizzarre, given other threads where posters ask if they should report friends who knowingly claim benefits they're not legally entitled to, are told to mind their business and keep their nose out. OPs is all above board, but gets shouted down. 🤦‍♀️

@BristolThenSome do the people on the other threads have £70k + net income pa? I doubt it.

Bristol
But the OP and her DH are not entitled to anything. They were badly advised. It’s not a loophole. There are very few loopholes in the benefits system (if any) and this is not one of them!!

@SoddingUnicorns
the amount shouldn't matter. because they earn less they get less shouting about they're illegal and morally reprehensible behaviour.
High income, but legally entitled gets shouted 'shame'?

@AnotherEmma
then there's no real issue, if she'd applied it would have been declined. if she was entitled, this thread would be plenty enough to not bother applying.

@BristolThenSome legally entitled? Did you read AnotherEmma’s post? They’re not, and also he’s using a questionable way of bringing over 50k pa into the household.

So they’re not entitled, and I’m sorry if having more sympathy for someone on the bones of their arse skint trying to find loopholes than someone who has managed to piss £70k up a wall and then plead poverty!!!

BristolThenSome

I agree with what you are saying - I have seen a lot of posts where people try to play the system and it is supported because they have less money, but OP should not claim what she (thinks she is - no idea if this is correct) entitled to having contributed probably a shitload of tax as a household over the years.

I wouldn’t do it personally, but I think the reactions are quite over the top and hypocritical given what I’ve seen on other threads.

I am amazed that OP has handled her finances so unbelievably poorly though, and it seems financially reckless without real savings to have started this company. With children and a house you can’t afford. I would definitely sell the house.

Are you in a tax credits area or has universal credit been rolled out where you are?
I know with universal credit even students maintenance loans are counted as income so I'm guessing your husbands loan, which sounds dodgy as hell by the way, would count as income.
All income has to be declared.
I think the limit on savings is 6k now, could be wrong but it used to be 16.
You earn twice what I do, I only have one child but even including childcare element of tax credits I get 400 a month, so my earnings and tax credits add up to less than just your wages.
What on earth is your husband spending nearly 5k a month on that you know nothing about.?
LTB, take your 20k plus 12k tax credits and enjoy life without your liability of a husband.

Gah, sorry I am trying to stay off this now but feel obliged to correct the information:

I didn't start a company - DH is a partner in a company/group, they sold off the profit making part of the business and embarked on a new type of financial business.
He was employed by them but they offered him partnership (2%). He resisted initially because the group was struggling and he didn't think they would make a profit. They put more pressure on and said /strongly implied he would be made redundant unless he came on board as a partner.
He has apparently been looking for another job for about 5 years.

we are not in a universal credit area, no. People in this area are able to make new tax credit claims. I will not be one of them however.

Weirdly the tax credit calculator didn't ask anything about savings. Just income, employment status and childcare costs.