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?

He has apparently been looking for another job for about 5 years.

I don’t really believe this - if he had such a well paid job before, usually a replacement is easy to find. I’m also very unsure about a man with a family and financial responsibilities has taken on such a risk because of what is essentially peer pressure. I agree in principle with your right to claim something you are able to, but I think the whole situation stinks and you need to live within your means.

"What on earth is your husband spending nearly 5k a month on that you know nothing about."

Some of the big things are:
season ticket
absurdly high running costs/council tax for house
materials for renovations (he has been doing a lot of the work himself)
mortgage

Yes, 100% we should live in our means. Absolutely. That's almost a separate issue because we are not living within our means even if his current monthly "pay" we can sure of being able to keep.

The furthest I have got recently with him is I have suggested moving. He has said let's see how things are in a year and reassess then.

Anyway, I am going to step away from the thread now.

season ticket and refusal to move from house you can’t afford? Under these circumstances OP, YABU!

The season ticket is a train ticket for commuting....

Oh lol I’m sorry I take back that part of BU, i thought a sports ticket!! 😂🙈

But the house should really go if you are in a financial mess!

So you live in a mansion...

I am glad that you have steered away from the tax credit idea dingledangle, (which had me !!!! at first) but actually i can see that you are in a bad place, with your husband acting like a 1950s dinosaur, unilaterally making decisions that are risky and a bit dodgy, and not talking to you about the money he has and spends. That could be said to be financially abusive, especially if he is putting your home in jeopardy and ignoring your concerns.

I can that that it would make you consider what you can do to keep things safe, when he wont.

At the very least I think you need to (try) to insist on a joint account and transparent finances, and sitting down with the accountant to have it all explained to you. He is so wrong to be making all these massive decisions and leaving you in the dark.

Please do find the strength to think hard about what you want long term and whether he is worth staying with, because actually I think this is bad enough already and you really wouldn't want it to get any worse and be forced to act in the midst of some kind of crisis.

Claim it OP.

You claiming it won't mean that a family in real need will have less, neither will it mean that I pay more taxes.

No skin off anybody's nose so far as I can see.
Crack on.

Nice of you to say mishfish.

Dingledangledongle I am a little confused over whether he is a partner or shareholder as that affects how he can take profits from the business. Hopefully though my initial explanations have given you enough background to be able to sit down and discuss his income and/or debt with him. It doesn't sound like the usual type of salary v dividends arrangement which most owner managed companies have, but a more complex àrrangement where the key investors probably have the scope to dictate profits and profit share arrangements. I think you should find out how your DH intends to repay the loan and/or any tax when they fall due and ask him exactly how much is technically due to the business right now. Good luck.

You should claim tax credits if you're entitled to them.

The Law is often a crude instrument and can't take the subtleties of people's situations properly into account. This means it will produce unfair outcomes, sometimes in your favour and sometimes against you. If you're going to set up you own idea of fairness as an alternative standard to guide your actions, are you going to somehow take money when the law is denying you money you think you should have? I doubt it. So that means you are living by two standards, and will in each situation always take the worst of two outcomes. Which is stupidly unfair to yourself.

This is why we get the benefit bashing narrative because people play the system & those in actual need get tarred with the same brush.