Estimating self-employed income and tax credits.

(8 Posts)
LovelyBath77 Sat 29-Oct-16 13:26:13

My husband's tax year runs from Aug to Aug, but tax credits asks for income / profit from April to April. So, we estimate. It will be less last year for the tax credits year than his tax year. I'm worried HMRC might check his tax return and think we've given the wrong figures and under-estimated. Does anyone else have a similar situation or any advice? Many thanks. PS It's been fine in the past.

Badbadbunny Sat 29-Oct-16 19:24:08

You give the same profit figure for tax credits as you put on your tax return. With an August year end, it's y/e Aug 15 you put on the 15/16 tax return, and the same figure for your tax credits renewal. You aren't using Aug 16 for the 15/16 tax return are you - if so, that's wrong.

LovelyBath77 Sat 29-Oct-16 20:37:53

Ok, I see.But the tax credits asks for the figure from April to April though.

LovelyBath77 Sat 29-Oct-16 20:38:10

Do they check the figure against the tax return?

Badbadbunny Sat 29-Oct-16 20:47:23

Yes, they do cross-check.

Re the accounting year end versus tax year end, you need to understand the difference between basis period and accounting year. The profits for the year ended 31 August 2015 form the basis period for the tax year end 5 April 2016, so it's profits Aug-Aug you use, not Apr-Apr. Gets quite complicated so you probably should have adopted a business year end the same to avoid the different dates. If you've not been doing it properly, you'll have to contact HMRC and adjust the affected prior years, and you need to calculate the overlap profit.

www.gov.uk/government/publications/how-to-calculate-your-taxable-profits-hs222-self-assessment-helpsheet/hs222-how-to-calculate-your-taxable-profits-2015#your-basis-period-for-2014-to-2015

LovelyBath77 Sun 30-Oct-16 12:11:48

OK thanks I'll need to speak to him.

LovelyBath77 Mon 31-Oct-16 10:20:39

Just found this info from the tax credits on getting your form right-

f you use averaging because you're a farmer, market gardener or creator
of literary or artistic works
You can't use averaging in your tax credits claim. So you need to adjust your total profits figure to take out the averaging.
You’ll have entered a figure in:
• Self-employment(full)pages,box72,or
• Partnership(shortorfull)pages,box11
If the figure in either of these boxes increases your profit, take this amount away from your total profits.
If the figure in either of these boxes reduces your profit, add this amount to your total profits.

LovelyBath77 Wed 02-Nov-16 09:13:40

Ok sorry, it seems my last post was wrong. here also has some useful info on how to calculate it.

revenuebenefits.org.uk/tax-credits/guidance/how-do-tax-credits-work/self-employed/#Self%20employment%20and%20income

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