Getting ahead of years salary payments in case of no contract before year end

[psychocandy]

I'm not sure that's the utterly ridiculous part, given that it's meant to be used when a genuine need arises (contractors are not immune from hardship, although many of us around here might question whether contracting was for us in that situation). However, the ridiculous part is trying to somehow optimise the JSA claim in advance. That is indeed ridiculous.

Your not optimising the claim. If theres no work I dont pay myself - end of.
You are optimising your tax position for the financial year I will admit. but then we all do this every day, dont we?

[psychocandy]

Calm down!

First you need to understand JSA has two elements, an NI Contributions based element and an Income Based element.

If you have paid sufficient NI Conts or obtained credits, you can claim JSA Conts if you are not working and taking a salary from your co. JSA Conts pays a basic entitlement and doesnt pay anything for dependents.

Income Based JSA takes into consideration how much savings you have (or have deliberately disposed off so as to make a claim). If you're over the savings threshold, you dont automatically get JSa IB although in cases of hardship, you can appeal against this. JSA IB can pay increases for dependents.

Virtually no contractor will be eligible for JSA IB wheile almost every contract could claim and receive JSA Conts if they wished.

Government and HMRC take enough cash off you. I dont see a problem claiming 70 odd quid a week if you're finding it hard between contracts but each to their own.

Spot on BB...

[psychocandy]

I get paid my salary once a year. How would that work with JSA? I've never claimed it and have no intention of doing so but would be interested to hear your expert opinion.

The salary timing is probably immaterial. Although I dont think you'd get away with saying, "but Im not working in march even though I paid myself a salary". Wouldnt wash I dont think.
but if you're without contract and not paying yourself then you can claim.

Interestingly, what happens if you pay a years salary on april 7th? Theoretically, you're getitng paid for the whole year so cant claim JSA at all - but I dont htink it'd ever come to this.
Whether you can continue to pay dividends is a grey area. Personally, I wouldnt - its not clever. But its a grey area.

Also, Ive had these discussions with some senior people at the JSA place last time. As far as they are concerned its all perfectly acceptable for them - no issues at all. Like BB said - big differnece for conts based JSA.

[psychocandy]

How can it be possible for a contractor to be in a situation where they can even claim this? Stopping paying yourself from your business bank when there is money available to claim JSA has surely got to be wrong. If there is no money in the bank to pay yourself then something is even more wrong.

The idea the contractor cannot make enough and has to rely on JSA is utterly ridiculous.

BTW. Claiming JSA when theres money in the business account is a grey area I will agree.

[jamesbrown]

Your not optimising the claim. If theres no work I dont pay myself - end of.
You are optimising your tax position for the financial year I will admit. but then we all do this every day, dont we?

I understand precisely what you're trying to do, namely to optimise your tax position with regard to a hypothetical benefits claim. By all means, make the claim if you're actually in hardship at the time, but optimising your tax position with regard to hypothetical claim is pretty cynical. I probably wouldn't bother with this criticism if you occasionally posted about something other than JSA, but you seem to take an obscure pride in claiming benefits, as evidenced by your sig.

[TheFaQQer]

I get paid my salary once a year. How would that work with JSA? I've never claimed it and have no intention of doing so but would be interested to hear your expert opinion.

Depends what your RTI says, I guess - if you are paying it in January (for example) for the whole year, does that appear in your PAYE records as one payment for the month, or do you pay the cash in one month and then put it through PAYE and file the RTI figures as if it's monthly (ie. it becomes a directors loan)?

If you have declared it to HMRC as one payment and only one payment, then you wouldn't be paying any salary for the other 11 months. Therefore, you could claim JSA if you are out of work and the company has no money.

If you are declaring the salary as being paid over each month, even though the money has been taken in one lump sum, then you won't be able to claim because you are still paying salary. You could stop the payroll and either repay the salary or accrue it in the DLA, but it seems a hassle.

[psychocandy]

I understand precisely what you're trying to do, namely to optimise your tax position with regard to a hypothetical benefits claim. By all means, make the claim if you're actually in hardship at the time, but optimising your tax position with regard to hypothetical claim is pretty cynical. I probably wouldn't bother with this criticism if you occasionally posted about something other than JSA, but you seem to take an obscure pride in claiming benefits, as evidenced by your sig.

I do post general rubbish as well!
My sig is in reference to the grief I get on this site for doing something thats perfectly allowable and legal.

BTW - contribs based JSA is nothing to do with hardship, its to do with what you've contributed.

[BolshieBastard]

BTW. Claiming JSA when theres money in the business account is a grey area I will agree.

No it is not. You are entitled to claim the contributions element of JSA irrespective of savings or retained profit in the company because it is based on you NI Contributions or credits in the previous 12 months.

Drawing a salary does not equate to working but equally, if you are drawing a salary, neither are you unemployed. Hence if you are not working and not drawing a salary you can claim JSA Conts element. If you take retained profit out of your co, this becomes your personal 'savings' and these are taken into account for the Income Based element of JSA.

If these savings are over the JSA IB threshold or you dispose of these savings to claim the IB element, you can be deemed to still have them and be sanctioned from receiving the IB element.

[psychocandy]

No it is not. You are entitled to claim the contributions element of JSA irrespective of savings or retained profit in the company because it is based on you NI Contributions or credits in the previous 12 months.

Drawing a salary does not equate to working but equally, if you are drawing a salary, neither are you unemployed. Hence if you are not working and not drawing a salary you can claim JSA Conts element. If you take retained profit out of your co, this becomes your personal 'savings' and these are taken into account for the Income Based element of JSA.

If these savings are over the JSA IB threshold or you dispose of these savings to claim the IB element, you can be deemed to still have them and be sanctioned from receiving the IB element.

Fair enough.

Isnt there a savings limit for contrib based as well though? Or used to be?

[BigTime]

Depends what your RTI says, I guess - if you are paying it in January (for example) for the whole year, does that appear in your PAYE records as one payment for the month, or do you pay the cash in one month and then put it through PAYE and file the RTI figures as if it's monthly (ie. it becomes a directors loan)?

If you have declared it to HMRC as one payment and only one payment, then you wouldn't be paying any salary for the other 11 months. Therefore, you could claim JSA if you are out of work and the company has no money.

If you are declaring the salary as being paid over each month, even though the money has been taken in one lump sum, then you won't be able to claim because you are still paying salary. You could stop the payroll and either repay the salary or accrue it in the DLA, but it seems a hassle.

I pay the salary in December as Dec 31st is my company year end and it's based on that year so in theory if I'm out of contract on Jan 1st, I should claim JSA. As self-employed contractors we shouldn't pay employment insurance or be able to claim it in my opinion.