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Self Employed & Tax Credits

(3 Posts)
bigchange Wed 01-Jul-15 23:29:59

So how does it work?

I'm about to become self employed (always been on PAYE) I claim working tax & child tax credit.

I will be working the same hours, roughly the same income, childcare remains the same.

I know I need to let HMRC know as soon as I leave my current role which is on PAYE.

But just wondered how it worked??

Thank you smile

hackneyLass Thu 02-Jul-15 00:00:18

Hi I havn't claimed for a few years but this is how it did work: you give HMRC an estimate now of what your annual income will be and they award you tax credits on that basis. Once you have you annual accounts done (which can 9 months after the end of the tax year) you tell HMRC the actuals and they work out if they have under or overpaid you and either pay you a lump sum (if under) or deduct from next award (if over). This works OK so long as your income doesn't change much from year to year. So if you realise mid-year your estimate was wrong then you can tell them. I found they are well used to self-employed people and can answer your questions. Hope that helps...

bigchange Thu 02-Jul-15 07:56:58

That's perfect! Thank you

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