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bigduckontax, Accountant
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Hi , Can i open or run a business,or be asociated in a company

Customer Question

Hi ,
Can i open or run a business,or be asociated in a company (ltd ) if actually i'm on low income declared at the home office ,and im on tax credits ?(working tax ,housing benefit).
Is any option to open a LTD and stay on the benefits for few couple of months ?
Thank you
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I'm Keith and happy to help you with your question.

You personally and any limited company you care to form are two entirely separate legal entities and are taxed under different regimes. You are taxed under Income Tax (IT) and Capital Gains Tax whilst the company's profits are subject to Corporation Tax (CT). The only way in which your benefits could be affected would be if the company paid you a salary or wages. These would be subject to IT in your hands, but would offset the company's profits in their accounts and reduce CT.

Such salary/wages, if paid, would affect your benefits. For example if you receive tax credits you must notify the Tax Credit Office of the changes within one month of them happening. If you did not receive anything then there is nothing to report and your benefits are not affected.
Customer: replied 2 years ago.

Thank you for your reply ...Keith a really good good helping hand !
please answer to the following quetion if it is possible :


 


That means if i will be asociated in a company its not a problem if im not contacting HMRC to tell them about an change of my situation as long as i dont get any salary or wage from the company where i am asociated ,right ?


----


After i will open a company (asociated ) definetley i need to inform the HMRC if the company is active,but do they ''cut '' benefits when i will inform them regarding this ?


 


Openning a company i will need a company bank account , do i need to inform HMRC about that ?


-------------------


Thank you Keith


 


 


 


 


 


 


 


 

Expert:  bigduckontax replied 2 years ago.
Correct; if your income does not change there is no requirement to inform the TCO of anything.

You must tell HMRC that the new company is operating. You can do this on line using their company registration service. As companies must file their tax returns on line then you can organise the appropriate Government Gateways, passwords etc to enable you to do this at the same time. This procedure is entirely separate from the TCO. As I told you you and the company are different legal people and do not mix.

When you come to file your company's tax return your accounts for Companies House can be extracted automatically at the same time you file your company for Corporation Tax. Have a look on the web for HMRC's advice sheet for 'Trading or non-trading for Corporation Tax explained.'

You don't need a separate bank account for the company, but it is always a good idea to have one so there is no danger of you, or someone else, misreading the ins and outs of a personal account. You will have to shop around for the cheapest product, I could tell you, but Just Answer rules preclude me from giving such advice. Two companies for whom I am Secretary prudently operate a system whereby their business accounts avoid all charges. There is no requirement at all for you to tell HMRC of the existence of a company bank account.
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3102
Experience: FCCA FCMA CGMA ACIS
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Expert:  bigduckontax replied 2 years ago.
Thank you for your support.
Expert:  Sam replied 2 years ago.
Hi Just a quick heads up - you MUST eport your association with this limited company to HMRC so they are aware of this potential source of income, plus you also need to consider, that with the time that you give to the limited company, will you current working hours change with the employment situation, will this drop below 30 hours but remain above 16 - or drop to less than 16 hours? So you may have to alert them of this too. Thanks Sam
Expert:  bigduckontax replied 2 years ago.

In fact there is simply no requirement to notify HMRC even if you work full time unless you are remunerated in some way.

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