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Please help me understand working/child tax credits if we're both self-employed

2 replies

Leek · 16/07/2008 19:57

I haven't had to do a tax return including a child before, it's complicated things!

I am currently on maternity leave, from my part-time job (2 1/2 days per week, getting stat mat pay which is due to finish soon) and also run my own business from home.

My partner is self-employed, doing work he started this year so his 07/08 return will be zero as he wasn't working or claiming anything (was building our house). He is now working, but we don't know what his end of year earnings will be for the current tax year as it is variable.

My business effectively made a loss (second year of trading, loss due to start-up equipment costs), which last year I offset against the tax I had already paid in my job to get a tax refund.

How do working tax credits and child tax credits fit in with this scenario, does anyone know? I tried to do entitledto.com's predictor, but it doesn't allow for such complicated options as this.

Would be nice to get anything we are entitled to, but not sure what the criteria for getting the credits is - do I just do my normal tax return and tick the 'I have one dependant' box, and they work it out for me?

Thanks, am feeling a bit out of my depth!

OP posts:
fiodyl · 16/07/2008 20:03

I have absolutely no idea sorry but I would guess that you may have to do a separate claim form for tax credits. I just cant see it was be that simple to just do one form unfortunatly. Maybe you need to give them a call.

VWLady · 16/07/2008 21:50

You will need to do a separate form to claim child tax credit and working tax credit - IIRC it's quite a lengthy one too. But it will be well worth it in your circumstances. Tax Credits and Income Tax do liaise in the case of self-employed but they work separately. They will ask for last year's earnings and an estimate of current/next year's earnings. You will need to contact them once your estimate becomes firmer. And you will be reviewed every year.
We're self-employed so obviously the money we received from tax credit in 07/08 was based on the money we'd earned in 06/07. However, during our recent review (and we submitted out 07/08 tax returns simultaneously) we had actually earned a lot less. So we are owed a pretty sum.
However, they are paying our 08/09 tax credit based on these lower earnings so I am going to put a lot of the current payments aside as we will need to make a pay back at our next review.
I realise the system has loads of problems, but ime it works really well for the self employed.

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