housing and council tax benefit with a ltd company

senior citizen has a ltd company but doesn't want to loose benefits

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Senior Citizen has a ltd company which doesn't make any money. It's used for some side consulting to pass the time.

He currently recieves Pension, Pension credit, Housing Benefit & Council Tax Benefit.

Are his benefits at risk if he continues operating this business bearing in mind it makes no money and has cash reserves of <£2k at any one time before its spent on expenses. Draws no salary or dividends either.

Thank you for your time in advance.

 

Replies (9)

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By paul.benny
06th Apr 2024 10:13

Basic state pension is contributions based. The other benefits you mention are means tested. And you're suggesting that you will earn from time to time but you don't want those earnings to affect the means-tested benefits.

Really?

As for Company... well if your expenses consume the consulting income, it seems to me you must either be working for (nearly) free or there are some works of fiction in your costs.

Sorry if that's not the answer you wanted to hear.

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Replying to paul.benny:
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By Kosher
06th Apr 2024 10:38

Hi Paul, Senior citizens do things to keep alert and pass time along, you are assuming there are dodgy expenses. With the council and DWP some expenses would be removed and could turn a loss into a profit. 13 years ago I had to claim council tax benefit because my guest house wasn't making any money and my accountancy business, all clients 90 miles away, had half a dozen clients plus a book-keeping job, so I know how council tax benefit works from experience. With savings and money in the bank there is a cut off level, it used to be £8,000 where the benefit got reduced and at £18,000 savings and above they paid no benefits, the same rules apply to benefits from the DWP.

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Replying to Kosher:
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By paul.benny
06th Apr 2024 12:02

Kosher wrote:
...you are assuming there are dodgy expenses...

What are all the genuine costs? An accountant or lawyer with a handful of small clients might have, say £2-3k for subs, PII, software, etc. But OP mentions unspecified consultancy suggesting non-regulated, so most of those costs would not apply.

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Replying to paul.benny:
DougScott
By Dougscott
06th Apr 2024 18:36

Paul, with all due respect there are plenty of situations where you can make a loss. Have a company car for example.

OP should be fine.

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Replying to Dougscott:
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By paul.benny
08th Apr 2024 08:50

We can all come up with scenarios where a small consultancy might make "no money", with varying degrees of plausibility. But OP hasn't come back with any more information - or even to participate in the thread in any way.
between the lines of OP's question seems to be about working without pay through their own company, but not declaring any income for the purpose of means tested benefits.

So we have breach of minimum wage legislation, perhaps failure to operate PAYE on the unpaid wage, benefit fraud or something closely adjacent thereto, and perhaps questionable CT deductions.

Or I've totally misread the scenario.

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By Kosher
06th Apr 2024 10:26

As long as he shows them his Limited company accounts and bank statements, as proof, he should be alright. But he would also need to divulge his personal bank statements showing savings. He should be alright if he is upfront with the council and DWP.

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By FactChecker
06th Apr 2024 16:59

"Senior Citizen has a ltd company which doesn't make any money. It's used for some side consulting to pass the time.
He currently recieves Pension, Pension credit, Housing Benefit & Council Tax Benefit.

Are his benefits at risk if he continues operating this business bearing in mind it makes no money and has cash reserves of <£2k at any one time before its spent on expenses. Draws no salary or dividends either."

I've repeated the whole post so that the various strands can be disentangled ...

1. As Paul has mentioned, of the listed benefits only SP is not means-tested (although there are other non means-tested benefits NOT listed).

2. For each of the other benefits you should look up the specific eligibility criteria that apply to it - in case there are other factors that will reduce or preclude the claim.
In particular, the most common 'failure' relates to the relatively low values regarding assets (not just 'savings' as people often assume).

3. When you get to look at any similar restrictions on earnings, for each Benefit, you will sometimes find a lack of clarity regarding whether it is gross or net earnings (and, if these are not through PAYE, whether all deductions are 'allowed' or will be added-back when determining eligibility).

So ... if *you* are the Senior Citizen (I'm still happy to be an OAP but times change), I'd look up each of those Benefits on GOV.UK and prepare a short list of questions with which you end up as 'unresolved' - and take those to your local CAB.
[If you're the SC's adviser, then you should really look up the legislation which is not an easy read but is far more comprehensive and so leaves fewer uncertainties.]

Those are the facts (in terms of what little can be gleaned from the posted question) ... and the closest I can get to 'advice'.
However, I'm curious as to *why* the Limited Company needs to be kept alive? If it provides SC with no earnings/dividends/drawings, then why bother to incur the costs and liabilities of keeping it alive? Just provide the consultancy services FOC (as I do).

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By Touran22
08th Apr 2024 09:41

Thanks to all have taken the time to contribute to my question. i really appreciate it.

Very interesting to see the difference in opinion some think this is more sinister, others are more open minded.

For the avoidance of doubt, my client like the business stuff that goes into running a ltd company hence why they want to go down this route instead of just working FOC.

It sounds like as long as we are honest with the DWP and other services and are transparent with our books we should be okay which we are happy to do.

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By Roland195
08th Apr 2024 10:03

FC has given chapter & verse however I would look it another way in that it may be better you don't advise at all. I have had some experience here hence the warning.

The benefit rules are drawn up differently from that of tax - The reporting conditions for income & expenditure for Universal Credit include an additional condition that expenses that are "extreme or excessive" for instance. Not directly relevant to trading via a company but you get the idea.

You would be taking a risk assuming that "as long as we are honest with the DWP and other services and are transparent with our books we should be ok" but how much time & expense are you willing to commit to confirm this?

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