Reply to: Housing Benefit adversely impact me?

[Brett at Nixon Williams]

Thanks.

Regarding whehter I'm entitled or not, I gave the Revenue as much info as I could. All my savings, my income, my ISAs. I even had them reassess the claim when I didn't think I was entitled. They weren' aware I was getting a salary as well as a dividend (I did tell them). When I got the reassessment, they still claimed I was due money. I have tried to be as open as possible in this process. My only fear is that I forgot to declare something, but I have no idea what.

I cannot comment on whether or not you were entitled to it. If you have provided details of all your income etc. and the Council still says you are entitled to it, so be it. I would keep the evidence to support this in the event this may be questioned later down the line.

In respect of paying the money back to purely save tax (if this did apply let's assume), you would still be out of pocket. Would you rather not have the income to simply save tax?

For example, instead of housing benefit, say you received bank interest of £80 (£100 gross with £20 of tax deducted at source).

A higher rate tax payer would pay an extra £20, i.e. £100 @ 40%, less the £20 deducted at source.

Would you then want to not receive the interest and be out of pocket £60, to effectively avoid having to pay the extra £20 in tax?

Hope this puts it into perspective.

Brett

[Boo]

Regarding whehter I'm entitled or not, I gave the Revenue as much info as I could. All my savings, my income, my ISAs. I even had them reassess the claim when I didn't think I was entitled. They weren' aware I was getting a salary as well as a dividend (I did tell them). When I got the reassessment, they still claimed I was due money. I have tried to be as open as possible in this process. My only fear is that I forgot to declare something, but I have no idea what.

My take : you worry too much.

Forget the money, benefits amount to a tiny sum in the grand scheme of things anyway, HMRC have told you that you're in the clear wrt tax on HB in any case so what's the issue ?

Boo

[heyya99]

Hi heyya99,

Housing benefit is a non-taxable social security benefit and hence should not affect your taxable income. See Social security benefits: list of non-taxable social security benefits

Whether or not you were entitled to this is a different matter.

I hope this clarifies.

Brett

Thanks.

Regarding whehter I'm entitled or not, I gave the Revenue as much info as I could. All my savings, my income, my ISAs. I even had them reassess the claim when I didn't think I was entitled. They weren' aware I was getting a salary as well as a dividend (I did tell them). When I got the reassessment, they still claimed I was due money. I have tried to be as open as possible in this process. My only fear is that I forgot to declare something, but I have no idea what.

[heyya99]

I have contacted my accountant with the news from Revenue that the benefit is none-taxable and won't impact my business. He has come back and said if the Revenue have confirmed that the money is not taxable and doesn't have to be declared on my personal tax return then I will not have to pay the money back.

What are people's take on that? I'm very confused now as to what to do. I want to keep my nose clean in all this.

[heyya99]

He's from SJD Accounting and he's useless.

[Podgy]

Whatever benefit you were entitled to cannot be 'repaid' - what would be your basis for repaying? my accountant 'thinks' I may go over a tax bracket this year!! what a rubbish accountant.

I don't think you can just pay back benefit! You must have been entitled to it to receive it - how do you think they will manage you trying to pay it back? probably via a fraud investigation!

Also you dont have to be completely penniless to receive benefits!

When you sign off benefits you get a statement of what amount is taxable i.e. to use for any self assessment (this is usually after claiming JSA). I take it you did not get any statement.

At least you found out your accountant is rubbish quite quickly.

[NotAllThere]

Discussion on whether he shouldn't be claiming as he doesn't "need" the money is irrelevant and will cease now. It's been done to the death.

[Ticktock]

Read the OP again. OP quite clearly states they are happy to repay it, but only if it's advantageous to do so. Perfectly reasonable question to me. But yeah, feel free to fire off without reading the OP properly. WP.

Oh, I did read it. The OP took money made available in a fund aimed to support those in need.
He is no longer in need (and may not have been at the time - if he was surely he would have intended to make the claim and it not been an accident?).
He is now questioning how to ensure he pays back as little as possible - should he hand back the money he doesn't (didn't?) need, in order to avoid paying a higher tax rate on an incremental amount of dividends.

[GillsMan]

So in essence, you happily took the money in benefits when it was available to you, but now you don't want to either return it, or pay more in tax?

Read the OP again. OP quite clearly states they are happy to repay it, but only if it's advantageous to do so. Perfectly reasonable question to me. But yeah, feel free to fire off without reading the OP properly. WP.

[Ticktock]

So in essence, you happily took the money in benefits when it was available to you, but now you don't want to either return it, or pay more in tax?

[northernladuk]

Question to the OP. You don't have £16k in savings or equity in the house or any other investments you could call on at all? Nothing?

I would be very worried of a situation like qh's. Filling the wrong document in for this lot and getting accepted IMO with no other diligence isn't a situation I would be wholly comfortable with.

[Brett at Nixon Williams]

Hi heyya99,

Housing benefit is a non-taxable social security benefit and hence should not affect your taxable income. See Social security benefits: list of non-taxable social security benefits

Whether or not you were entitled to this is a different matter.

I hope this clarifies.

Brett

[Pondlife]

The reason I should pay it back was because my accountant said he expected the benefit payment to push my dividends into the higher rate tax bracket which would mean that I would have to pay 25% personal tax on the dividends that exceed the threshold.

Erm, pay less in divs this year maybe?

I assume you mean this tax year as your accountant said they expected you would go over.

[quackhandle]

At least they aren't accusing you of fraud. My council was paying CT/Housing benefit for two years, I was getting a bill saying nothing to pay.

Earlier this year they accused the wife of fraud, had interview under caution, a total sodding nightmare. The benefit was in her name but CT was in joint name. WTF?

Agreed to pay it all back but then they tried to fine us 900 notes on top. Fought it with help of solicitor and local MP but not something I'd like to go through again.

Issue caused by the Job Centre people not bothering to send a letter/email/call to the council. Makes the Bobs look efficient and clever. Solicitor said we had a case however but she said the local council will never admit to any mistake

</rant over>

qh

[northernladuk]

As weird as this may sound, I actually didn't intend on claiming this. I heard about the single person's council tax reduction and filled out the wrong form. I was amazed when the council came back saying I was owed money. I should have stopped it immediately but then again, I was out of work. I even went to the council and told them it couldn't possibly be right that I'm owed money. They disagreed. Only my accountant raised concerns.

The fact I got the money isn't the issue here really. It's whether it's in my benefit to pay it back, as suggested by my accountant. My accounant hasn't earned my trust yet so I'm looing for a second opinion. £4k is alot of money to pay back on the whim of an accountant who doesn't care what I do.

You filled out the wrong form?!? Jesus....

Are you sure you didn't fill out the wrong form incorrectly? Something doesn't sound right at all here... but anyway... If your accountant doesn't care what you do I would be thinking about moving. I pay mine to care.