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Has anyone successfully proven their hours of self employment to tax credits?

(26 Posts)
usernamesandgingerbreads Wed 30-Dec-15 10:07:02

I work in online advertising. I have masses of proof it is an actual business but i do not keep a diary of every minute I spend so i am wondering if anyone can help me with what format to use to prove the hours i work to them?

Quodlibet Wed 30-Dec-15 10:22:38

Following as I also have no idea how you are supposed to evidence this. In a lot of cases it must be unprovable. My DP is a musician. If he spends 4 hours composing or 4 days composing sometimes the result is the same. How can he possibly prove his hours apart from just declaring them?

leaningtoweroflego Wed 30-Dec-15 10:32:49

IIRC you need to keep your own record if then I think, and they may ask to see that,

DP is self employed and I don't remember him being asked to produce hours last year (we updated them by phone as we went) but that might be my poor memory!

This is all set to change though. There are changes on the horizon where you need to be earning the equivalent of national minimum wage for a full time week or you will need to attend the job centre as if you were unemployed, and prove you are looking for more work. They will be able to force you to take a crappy job with more hours in an unrelated field or lose the support they give you. I think I heard that you get a year's grace to set your business up but I have no idea if that ended up in the final plan. Also no idea how you're effected if you've been self-employed for a while.

leaningtoweroflego Wed 30-Dec-15 10:48:04

Sorry that should say

IIRC you need to keep your own record of them

Quodlibet Wed 30-Dec-15 11:23:22

Yes this Universal Credit system is totally unworkable if you are in certain creative industries. Eg if I write an album or a novel, then I might earn nothing for a year while I produce it, but then the income from royalties from that novel/album might produce quarterly or annual income for two decades. It fails to take account of the fact that not every job works on the equation hours in = pounds out per week. For many jobs the yields may add up over months or years.

Industrialhelicopter Wed 30-Dec-15 21:56:39

It isn't about it being a business- I could have a business and make a loss constantly. It is about it being a profitable business so that you can keep yourself. Benchmarking it to the NMW based on a very low threshold for the number of hours seems sensible (no-one really setting up a business only works 30 or 16 hours a week-its laughable)

If you are working the 80 hours that many genuine new business owners do and not making enough to keep yourself then you need to look for another job or a new business.

Piratespoo Wed 30-Dec-15 22:19:17

You could use something like paymo app. It's free and you log your own hours. I use it.but can't testify if it helps with benefit claims as I don't claim them but it might be a workable solution?

RB68 Wed 30-Dec-15 22:31:27

most businesses do not turn a profit for at least 2 years - that is a researched piece of info and a well stated benchmark the government are ignoring. Many small business people work for less than min wage and as a director of a Ltd co you can legitimately pay yourself less than the min wage as a salary. What they are doing is making it harder to get financial support whilst you are doing this. They have seen a huge rise in the no of people trying to go self employed because of the systems they are putting in place for benefits. So have seen a rise in people needing wtc and ctc so are trying to address this. I think the red tape they are introducing for this is going to hit women the hardest as many try and set up their own businesses to work around other caring commitments -either children or relatives etc. I think there should be some monitors and controls in place but they are going about it the wrong way and in the first 2 to 3 yrs they should be using different measures.

RB68 Wed 30-Dec-15 22:32:40

When I had to keep hrs previously for benefits people they have been happy with a handwritten log - just keep a diary and log hrs per day - I used to do in 15 min logs - this is not uncommon in a workplace e.g. solicitors or accountants office where they charge clients

Industrialhelicopter Thu 31-Dec-15 02:06:42

most businesses do not turn a profit for at least 2 years - that is a researched piece of info and a well stated benchmark the government are ignoring.

Most people have small personal service businesses and companies- bing self employed in that way is not the same as setting up a larger scale venture.

Ta1kinPeece Thu 31-Dec-15 15:53:02

Why do you need to prove your hours?

Under Universal credit you do not get assistance unless your self employment net profit equates to more than the NMW

so work out your net weekly profit, divide it by the NMW and that is your number of hours

if its under 24 you will not get help as your business is deemed a "hobby"

the subsidising of hobby businesses with tax credits is one of the few clamp downs I totally approve of.

most businesses do not turn a profit for at least 2 years - that is a researched piece of info and a well stated benchmark the government are ignoring.
Link please

absolutelynotfabulous Thu 31-Dec-15 16:02:00

I have a friend who's an "artist". It's a hobby-she makes no money. She has two dds and is a single parent. She manages-I have no idea how. She has no intention of working to support herself, even though the dds are both in secondary school.

I'm thinking of ltb and wondering if I'm eligible for Tax Credits whilst developing a (legitimate) business as a piano teacher. I'm already doing it informally, and declaring the income.

I'm also wondering how you would quantify input whilst not earning very much.

usernamesandgingerbreads Thu 31-Dec-15 17:23:22

Ta1kin been Self Employed in this area since May. Making a profit but not yet reached NMW. It is the new Working Tax Credit rules that are asking for proof of hours rather than Universal Credit.

Ta1kinPeese Thu 31-Dec-15 17:27:32

But its the same logic .... this was announced two years ago by HMRC
work backwards from your net profit to get your hours

tangerinesarenottheonlyfruit Thu 31-Dec-15 17:28:40

"It is the new Working Tax Credit rules that are asking for proof of hours "

Are they? I had no idea! From when, from this 2014/15 year or starting in April?

We haven't done this, this year, I had no idea we had to!

tangerinesarenottheonlyfruit Thu 31-Dec-15 17:29:29

I've updated them as we've gone along but I haven't kept a record of what I said to them.

Ta1kinPeese Thu 31-Dec-15 17:30:23

its really only an issue if you have very low earnings
and TBH tax credits are being so ripped to shreds back to how they were when I claimed them that few self employed will get them soon.

tangerinesarenottheonlyfruit Thu 31-Dec-15 17:32:31

"work backwards from your net profit to get your hours"

That's not true.

For WTC, you always counted both remunerative and non-remunerative hours for self-employment.

So you could count time travelling to a job, or doing your marketing or doing your books as part of the job, not just hours you get paid for. (Note, this is for self-employment only, you can't count travel time if you're employed)

This may be changing, but I'd like to see that written down, not assume it's like UC, because if it is, that's a big change, and contrary to what the advisors at WTC have said to me on the phone several times this year.

Ta1kinPeese Thu 31-Dec-15 17:38:18

The point I'm trying to get at in my usual accountant speak
is that unless your paid hours bring your total working hours up to a valid income then its a hobby not a business.

eg 16 hours a week at NMW = £6.70 x 16 x 52 = £5574 net profit per year
or 24 hours a week = £8362 per year

you might work 40 hours a week but if your net profit is not greater than the relevant figure, HMRC are going to look askance at subsidising you.

usernamesandgingerbreads Thu 31-Dec-15 18:00:33

Tangerine I had a letter a few days ago from them. As well as telling them what hours you work you now have to send them evidence of this.

usernamesandgingerbreads Thu 31-Dec-15 18:01:00

Only when they ask for it though.

MarkRuffaloCrumble Thu 31-Dec-15 18:01:58

I just kept a diary for 3-4 weeks to show all the different things I did that counted as work throughout those weeks, but also gave examples where this was pointless and I might work all through the night, or have a child off school and do no work that day, but catch up at the weekend or do two jobs simultaneously (I have several businesses and some of them overlap!)

I think I baffled them with so many variations that they just gave in! Mine equated to slightly less than NMW but I think as it was still an acceptable wage (I.e. Not making a loss or just minimal profit) they let it go. I pointed out that I could get a NMW job and earn a few ££ more but that they'd then have to pay towards childcare for me, so it was better for me to carry on as I was!

MarkRuffaloCrumble Thu 31-Dec-15 18:17:13

I also included some photos of the work I do creating things so that they could see the level of detail that went into some of the projects and why they took so long for the admittedly too little money. I think they do give you some leeway as a new business and understand that you won't be making a good profit from day one.

Viviennemary Thu 31-Dec-15 19:08:00

I'm glad these 'creative' type businesses have come under scrutiny with the new system. How can people pursuing hobby type pastimes qualify for working tax credits.

usernamesandgingerbreads Thu 31-Dec-15 19:40:40

Mark Ruffalo
Do you mind me asking what format it took.
i.e did you just write down a list of everything you did that day and a general time i.e 5 hours or did you write down the time spent on each specific task you did i.e emails to new clients 15 minutes, emails to cross sell to current clients 20 minutes type thing?

Just to add it is not a hobby
I have an active website, Facebook and Twitter with a very high amount of likes and page views and have clients which include the local council.

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