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I want to work self employed part time, how do working tax credits and tax work?

(55 Posts)
HowD Tue 14-Jul-15 13:19:48

I am a clueless novice.

Help!

TalkinPeace Tue 14-Jul-15 14:18:29

They barely do.
And even less so from next April.
You'll need to prove you are making more than the NMW net profit for more than 24 hours a week and the rest to get them.

Aim to live on your income and then tax credits may help, they may not.

lougle Tue 14-Jul-15 14:37:31

As TalkinPeace says, your business will undergo a profitability test. From April 2016 the test would be net profit of £7.20×24 per week (£172.80) or x16 (£115.20) if a lone parent.

If you don't earn that much after 1 year, they won't class you as SE.

Mrdarcyswife Tue 14-Jul-15 18:09:08

I was about to come along and ask this question too. I'm sorry, I must be really clueless, but I don't understand the profitability test.
I'm going to be starting up in September, and it will take until Xmas at the earliest before I am making over £100 (lone parent). Do I have to wait till then to claim?

Where can I find more info on this?

lougle Tue 14-Jul-15 20:19:51

You need to register straightway because they won't backdate past 1 month. But you'll need to give an estimate income for the year.

TalkinPeace Tue 14-Jul-15 22:15:49

You can no longer get tax credits to top up "hobby businesses"
you are either making a decent living - in which case tax credits may top it up
or its a hobby, and you need to get a real job.

HowD Tue 14-Jul-15 23:53:46

I am not starting a hobby business confused and you don't know what my circumstances are. I feel "you need to get a real job" isn't the most helpful post. Thank you for your concern anyway.

ChesterCake Tue 14-Jul-15 23:56:43

Talkin wasn't judging you. Her statement is what tax credits believe and how they will view your claim. If it's not enough to earn a living you will be expected to find a job that does bring in enough if you want tax credits.

SurlyCue Tue 14-Jul-15 23:57:32

Emm i think talkinpeace is using the rhetoric of the Govt and tax credits crew! He/she isnt having a dig at you- this is what tax credits will tell you.

pickledparsnip Wed 15-Jul-15 00:06:35

I am fucked. Single parent, self employed, and don't earn the required amount. Business has only been going 8 months. Utterly fucked.

SurlyCue Wed 15-Jul-15 00:12:38

Pickled is there any way you could make it work better to earn the required amount? Is it really worth being self employed if it isnt even getting you 16 hours min wage?

pickledparsnip Wed 15-Jul-15 00:21:02

Right now it's ok as I've managed on a lot less. I'm building stock up, getting things into galleries, it all takes time. Has been perfect as ds started school in September

pickledparsnip Wed 15-Jul-15 00:22:30

Posted too soon. Ds started school in September and could work round that. I have a days work starting this Autumn, so that will top things up a bit.

pickledparsnip Wed 15-Jul-15 00:24:33

I see know that I will have to get better paid work and then do self employment as well. When/if the self employed work picks up, maybe I can give up the PAYE work.

gamerchick Wed 15-Jul-15 00:36:58

I'm starting to think I need a real tin foil hat.

Iike real metal.

SurlyCue Wed 15-Jul-15 00:44:09

Will you be able to pick up again in september when he goes back to school? It might be worth getting employed work for a bit til Things pick up. Its hard to know what to do for best. Ive been mulling over going SE but it doesnt seem at all wise right now.

MaggieJoyBlunt Wed 15-Jul-15 00:52:13

I'm starting to think I need a real tin foil hat.

There's an original business idea wink

lampshady Wed 15-Jul-15 07:17:37

No, the minimum income floor won't count for single parents if you can show you're in gainful employment, so you won't need to be earning minimum wage and will still be topped up. Certain groups will be exempt from needing to earn minimum wage.

www.moneyadviceservice.org.uk/en/articles/universal-credit-for-the-self-employed

You'll be in the no work related requirements group. Keep incredibly detailed records as when it comes in you'll need everything to be watertight. Also you'll have a year to become profitable so I'd recommend becoming shit hot at showing projections on excel.

Howcanitbe Wed 15-Jul-15 07:33:49

Message withdrawn at poster's request.

lougle Wed 15-Jul-15 07:42:45

It sounds like it's going to be really tough, actually. With the new monthly assessment, they won't allow you to offset high income months against high expenditure months. So if you have a month where you have a lot of expenses, it's tough luck. Also, it's paid in arrears, so if you have a high earning month, then a low earning month, on the low earning month you'll get hardly any SE income, combined with hardly any UC because it's been calculated on your high earning month.

lampshady Wed 15-Jul-15 07:43:28

Only if you can show you're in 'gainful employment'.

From Money Advice Service:

What counts as gainful self-employment?

To count as gainful, your self-employment must be organised, developed and regular and you must expect to make a profit. It should also be your main job.

At the gateway interview, you’ll need to provide evidence of your self-employed activity, for example your business plan, copies of invoices and receipts, or trading accounts from the previous year.

If the assessors decide that you are not gainfully self-employed you’ll need to look for and be available for other work instead.

twirlypoo Wed 15-Jul-15 07:45:15

I bought a franchise and so am tied in for another 4 years and am utterly fucked by these new rules. I am a single parent, business been going 7 months and some months i barely break even. Need a miracle. Or a rich husband. Id take either!

LineRunner Wed 15-Jul-15 07:45:44

It seems to depend how old the youngest child is.

lougle Wed 15-Jul-15 07:49:40

Actually, having looked it up again, the minimum income floor is going to be 35 hours at minimum wage. So £252 per week.

TalkinPeace Wed 15-Jul-15 07:55:43

I did not mean to sound harsh : I have a tendency to quote from the HMRC website as its the top one of my bookmarks (sad accountant type)

The fact is that if you are just starting out as self employed you probably need another source of income as well - its called portfolio working

I'd like to see a link that says you have to make a profit in every month as that is directly contrary to all self employment law
: if a business buys a big bit of machinery, it makes a loss that month. It does not make them unprofitable over the year.

If such a link does exist on the DWP I'll set the acountants onto it grin

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