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Original poster

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

54 replies

HowD · 14/07/2015 13:19

I am a clueless novice.

Help!

OP posts:
TalkinPeace · 14/07/2015 14:18

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 · 14/07/2015 14:37

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 · 14/07/2015 18:09

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 · 14/07/2015 20:19

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 · 14/07/2015 22:15

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.

Original poster
HowD · 14/07/2015 23:53

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.

OP posts:
ChesterCake · 14/07/2015 23:56

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 · 14/07/2015 23:57

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 · 15/07/2015 00:06

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

SurlyCue · 15/07/2015 00:12

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 · 15/07/2015 00:21

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 · 15/07/2015 00:22

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 · 15/07/2015 00:24

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 · 15/07/2015 00:36

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

Iike real metal.

SurlyCue · 15/07/2015 00:44

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 · 15/07/2015 00:52

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

There's an original business idea Wink

lampshady · 15/07/2015 07:17

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 · 15/07/2015 07:33

This reply has been deleted

Message withdrawn at poster's request.

lougle · 15/07/2015 07:42

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 · 15/07/2015 07:43

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 · 15/07/2015 07:45

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 · 15/07/2015 07:45

It seems to depend how old the youngest child is.

lougle · 15/07/2015 07:49

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

TalkinPeace · 15/07/2015 07:55

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

lougle · 15/07/2015 08:00

Hmm, I've just read this:

"Normally you cannot make a new claim for Universal Credit if you are self-employed, a company director or part of a limited liability partnership. Once you have an established Universal Credit claim, if you decide to become selfemployed, Universal Credit will provide support to help you grow your business." <a class="break-all" href="https://www.google.co.uk/url?sa=t&source=web&rct=j&url=www.gov.uk/government/uploads/system/uploads/attachment_data/file/432807/uc-and-self-employment-june15.pdf&ved=0CBwQFjAAahUKEwiAysm4x9zGAhUDBtsKHYIbDtk&usg=AFQjCNFgNQCnJQfOhJZa3miscUG6P8Lixw&sig2=cEpaEhLzLfnPHYJJ-9Ik0Q" rel="nofollow" target="_blank">gov.UK link

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