Claiming housing benefit when owning a company

Claiming housing benefit when owning a company

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 I was speaking to a potential client yesterday and looking at their company accounts. It is a couple of years old with losses in those years but is now making a profit. There is a loan to owing to the director and as well as taking a below personal allowance salary he ha been drawing down on this.

I was quite surprised; however, when the client said he had been claiming housing benefit. I didn't think you could claim any benefits, particularly when you ran your own company. Apparently he had given all his company and personal information when they approved.

Has anyone else had this scenario or seen clients that claim other benefits

He is also claiming tax credits.

Replies (10)

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By petersaxton
09th Jun 2011 08:40

Why not?

I don't see why owning a share in a company means you can't get benefits.

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By LyneT
09th Jun 2011 09:26

housing benefit

This is quite a common scenario.  Housing benefit is payable whether or not you are working, and whether or not you own your own company.

Here is the link to the regs. http://www.legislation.gov.uk/uksi/2006/213/contents/made

check out section 49 (notional capital) paragraphs 5 and 6 which says:

 

(5) Where a claimant stands in relation to a company in a position analogous to that of a sole owner or partner in the business of that company, he may be treated as if he were such sole owner or partner and in such a case— (a)the value of his holding in that company shall, notwithstanding regulation 44 (calculation of capital) be disregarded; and (b)he shall, subject to paragraph (6), be treated as possessing an amount of capital equal to the value or, as the case may be, his share of the value of the capital of that company and the foregoing provisions of this Section shall apply for the purposes of calculating that amount as if it were actual capital which he does possess.

(6) For so long as the claimant undertakes activities in the course of the business of the company, the amount which he is treated as possessing under paragraph (5) shall be disregarded.

 

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By TonyUK
09th Jun 2011 09:33

I once had one like this

Claiming housing benefit, but did not tell me at the start. He operated under a company name giving music lessons, actually across the road from me, making a lot of noise too. Prior to me finding out about the benefit he claimed a sizeable amount of rent against his profits, and which the council was already paying for. This is what you need to watch out for. Thankfully I no longer act for this client.

 

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David Winch
By David Winch
09th Jun 2011 10:26

Providing information

If the client has provided all the relevant information to the local authority (and to HMRC for tax credits) then he certainly is not being dishonest in making the claims. 

There was a case a few years ago of a Mr Passmore who was claiming housing benefit.  He formed a company but did not tell the local authority he had done so.  He received no income from the company.

When the local authority became aware of the existence of the company he was charged with a criminal offence of dishonestly failing to notify a change of circumstances affecting his entitlement to benefit.

In the Crown Court he was convicted, but the conviction was quashed on appeal because the forming of the company would not actually have resulted in a change to the amount of benefit he was receiving.  The case was R v Passmore [2007] EWCA Crim 2053.

David

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By CathyB
09th Jun 2011 12:37

Capital

As I understand, capital of more than £16,000 will mean no housing benefit is due and is scaled down for capital between £6k and £16k.

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By bobtee
09th Jun 2011 18:27

I've seen it too

I know and have heard of folk doing this and it is allowed for all the reasons explained already.  As long as you don't lie about your income, cash in the bank situation you can claim all the same benefits as those normally employed. 

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By petestar1969
17th Jun 2011 12:38

To the OP

I'm not sure about the housing benefit question but this would seem to have been adequately covered by other posts.

What drew my attention is your throw-away line "he is also claiming tax credits".

You should be going through your client base and identifying other clients in his position who would also be able to claim tax credits and using it as a way to raise your own income by approaching those clients and offering the service, for say 20% of what they get, of applying for tax credits for them rather than being surprised that at least one of your clients has the gumption to claim what he is entitled to and, by implication, suggesting he is dishonest...

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By ChrisBurr
17th Jun 2011 13:06

Agree with Pete up to a point.

We can spend so much time finding ways to minimise tax, its easy to forget when there is potential for some self employed/ company/ business owners to get some payments (like tax credit) back from HMRC legitimately.  There are plenty of start-ups in this position.

Did you really mean 20%, seems a bit high/cheeky Pete? How long would you take 20% for? first qtr/year/ forever? 

Filling out the forms is not difficult and I would have said most people capable of runnning their own business could fill-in the required forms on-line and deal with the resultant HMRC paperwork that ensues.  I would mention it to the appropriate clients as a free added value suggestion, recommend that they go online and use the checker there to work out their potential entitlement if they want and; offer to help them for a time based fee if they don't feel they can or don't have the time or need support to complete the detail.

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By monwell
06th Mar 2014 16:18

HB and Companys

I am in this situation does anyone have any info to share?

 

reghards

 

monwell

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By theboss
21st Jan 2015 21:36

you can claim benefits even if you have a million pound in your business, just pay yourself a low wage and you get housing benefit, council tax paid, tax credits and children benefit. there is nothing anyone can do about it boommmmmmmmmmmmm

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