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Sam, Accountant
Category: Tax
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Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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At present, I am a limited company and have for the past

Customer Question

Hi,At present, I am a limited company and have for the past year (6th April 2015 to 5th April 2016) been claiming a salary of £7500 per annum as managing director. I am also still claiming this. However, the company has made a loss and I have not been actually lifting this revenue as a salary - I have a directors loan account which owes me money. I am also self employed with a salary.My dilemma is with tax credits. Because of the £7500 salary declaration together with my self employed revenue, I am not entitled to tax credits. However, if I did not take a salary or declare one from the limited company I could obtain tax credit by saying that I had a self employed revenue (working 15 hours a week) and £0 revenue for 25 hours I am working in my limited company.Would it not be more financially viable for me to stop taking out the £7500 and get the tax credit at this stage? I also presume I pay NI through my self assessment declaration form?Warm RegardsChristine
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.

Hello Christine, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.

As a director any emoluments paid to you must be made under PAYE arrangements as director is an employee per se. As these moneys have not actually been made, but placed in a directors' loan account no tax is due and none should be declared on your self assessment tax return. You should thus have a lower income and a better entitlement to tax credits.

I do hope that you have found my reply of assistance.