Tax credits and self employment

[MyBoysAndI]

Asking for a friend. She is a lone parent of two children age 11 and 8 years. She is self employed and earns approximately £12,000. No other income except child allowance.

Currently she received £60/ wk in benefits. I felt sure this seemed too low and on using the benefit calculator it said she should receive more.

However when my friend phoned the tax credit helpline, they said the amount she is receiving is correct as different calculations are used when one is self employed.

Does anyone know if that is true?

It does seem on the low side. Is she paying back a previous overpayment or something?

Underpayment or overpayment?
Have they decided she isn't working enough hours and therefore isn't entitled to the WTC element (although I would have though CTC alone would have been more than that for 2 children.) The rules for self employment are more complicated after they decided a couple of years ago that some people were claiming to be SE when they really weren't.

Government calculator says she should be getting more like £150 a week but she really needs to work it out herself - the entitlement tables are online, she needs to add up everything she is entitled to, see if any disregards apply (if her income has gone up or down since previous year) and deduct any money she needs to because of income (only profit from her business). Bit of a fat but more accurate than the online calculators.

She is FT. Not paying anything back.

The person on the phone couldn't explain how they calculate it when self employed - just that it's "different". My friend has asked for someone who can explain it to phone her.... of course no-one has.

I'm sure someone told me that wtc for self employed these days is calculated as minimum of 40 hrs x nmw - even if earnings are lower.
That would be £15,600 maximum as I'm sure its probably not as basic as 40 x 7.50 x 52 but would probably increase the amount they calculate her earnings as iyswim?

I should imaging its to stop hobby workers claiming max tax credits for minimum work.

She should create a company then pay herself as a salaried employee maybe?

That is definitely a way round it Eggson, but not everyone would be comfortable with either the admin burden or the cost to farm that out elsewhere. Probably not cost effective overall on £12k if you can't set up and run a ltd co and payroll scheme yourself I'd have thought.

Just my opinion

Hey

I’m self employed but not single so this may be different

We were only entitled to tax credits once we were paying for childcare for our children. In order to be entitled I had to be earning the minimum of the equivalent of 16 hours per week at minimum wage. When we were not paying for any childcare we were not entitled to anything.

If her children are 8 and 11 her childcare fees aren’t going to be too much which is probably why she only gets £60 per week

That’s all I can think of.

Many thanks everyone