I am a contractor with my own Ltd Company. I normally pay myself a small salary + dividends to keep myself just under higher rate threshold. I normally make a large profit which I keep in the company or else I have to pay higher rate tax.
I read a thread on another forum about a contractor who takes a very low salary (I think it was £8k) and paid himself very few dividends during the year so he ended up with total income of less than £15k. He then claimed both working tax and child tax credits which also entitled him to various benefits (free school meals, housing benefit, council tax benefits, child benefit etc). He said this was totally legal but I am not sure as wouldn't this be a case of deprivation of income?
I found this on the HMRC website; TCTM04800 - Notional income: Contents
Not sure if any of the situations listed applies to a Ltd Company contractor who is taking very little in salary/dividends in order to claim benefits.
I would like to hear other contractors views/experiences. Thanks!
I read a thread on another forum about a contractor who takes a very low salary (I think it was £8k) and paid himself very few dividends during the year so he ended up with total income of less than £15k. He then claimed both working tax and child tax credits which also entitled him to various benefits (free school meals, housing benefit, council tax benefits, child benefit etc). He said this was totally legal but I am not sure as wouldn't this be a case of deprivation of income?
I found this on the HMRC website; TCTM04800 - Notional income: Contents
Not sure if any of the situations listed applies to a Ltd Company contractor who is taking very little in salary/dividends in order to claim benefits.
I would like to hear other contractors views/experiences. Thanks!
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