Start new business whilst receiving tax credits

[lms3303]

I am considering starting my own business up buying products and supplying direct to customers and to service providers for onward sale to their customers. I am unsure how it would work with relation to the existing tax credits I receive as a single parent already in employment 19 hrs per week.

My understanding at the outset is that I could only take a wage if their is financial capacity so I'm also unsure how this would work with tax credits as well.

Any advice would be extremely helpful regarding this.

Thanks

You would declare the extra hours you are working and at first your expected income, before telling them at the end of the tax year your actual income. Be careful, as if you earn more than you estimate, you will receive an over payment that you will then have to pay back. You can expect to provide a business plan or proof that your business is viable. You cannot claim that you are working 80 hours a week after trading for two years and only earning £6000 a year. This is different if you are on or get moved universal credit.
It won't be a case of "if there is financial capacity to take a wage" if you are a sole trader. What you earn minus what you spend is your income, whether you take it or not. On the flip side, if that is a negative figure you can offset against your other earnings to save tax (if you are earning enough to pay tax on your part time job).