Going self empokyed and working tax credit

[johnopaulo]

Hello everyone, I have a question. I have been long term incapacitated through ill health. I still have a health problem but I can work for myself with limitations. And I have decided that the only way I can work is by working for myself. The question is my wife has been claiming for working tax credit and child tax credit for years as she works full time. My benefit money was always accounted for in the calculations so if I decide to go self employed and have zero income at least for the first year anyway, will our tax credits increase until i start making some money?

Thanks

Johno

[johnopaulo]

Sorry about the spelling error in the thread title

[JohnsonandJohnson]

Hi Johno Paulo,

I would strongly recommend that you conduct some research, I would firstly suggest that you contact the HRMC and tell them of your intentions; be honest and they will give you all the answers to your questions.

Please remember to contact the Working Tax Credit department...your Child benefit shouldn't be affected as this is an entitlement to every child.

Hope that helps in some way?

[Jenni384]

Will you be losing all your benefits? I think some benefits like incap allow you to work a small amount (though you will likely know better than I).

Your income from self employment (and thus what you declare on your WTC/CTC claim) is your profit and not what you take out of the business, it's an important distinction to make.

Likewise, if you were selling goods and you re-invest all the profits into more stock, you have still made a taxable profit if you still have the stock at the year end.

WTC is based on your total household income so if you actually make no profit and your benefits stop then in theory you could get more WTC. Remember WTC is based on hours worked (16/30 per week) so if you work under 16 hours you don't qualify for WTC.

[Williams lester]

You may also want to speak to the DWP Access to Work Department, they may be able to assist you with certain things when you begin working for yourself.

[robindunne]

Hello everyone, I have a question. I have been long term incapacitated through ill health. I still have a health problem but I can work for myself with limitations. And I have decided that the only way I can work is by working for myself. The question is my wife has been claiming for working tax credit and child tax credit for years as she works full time. My benefit money was always accounted for in the calculations so if I decide to go self employed and have zero income at least for the first year anyway, will our tax credits increase until i start making some money?

Thanks

Johno

Tax credits are based on the previous financial years income, but you can elect to have them based on the current years estimated income if you expect the current year to be less. This can be dangerous if you turn out to make more money than you estimated as an overpayment could occur.

Also, a difference between tax credit and income tax legislation is how household income is calculated. For tax credits you can offset any loss you make against your wife's income - very handy if you have expenditure int he first year resulting in a loss as you try and set yourself up.

[Homshaw]

Remember WTC is based on hours worked (16/30 per week) so if you work under 16 hours you don't qualify for WTC.


Should be OK on the hours if your wife works full time. One of you needs to work more than 16 hours and you both need to work more than 30 hours in total

Unfortunately I know nothing about incapacity benefit except to say you are a brave man to give them up and there should be a system in place to allow you to go back on them if you can't cope .

Whatever you decide I hope it works out for you

[Homshaw]

Tax credits are based on the previous financial years income, but you can elect to have them based on the current years estimated income if you expect the current year to be less. This can be dangerous if you turn out to make more money than you estimated as an overpayment could occur.

It might be dangerous but its the only way to get the money when you need it and they are only backdated for 3 months so you could lose a serious amount of money if you didn't do it.

[robindunne]

It might be dangerous but its the only way to get the money when you need it and they are only backdated for 3 months so you could lose a serious amount of money if you didn't do it.

I'll second that. As long as you get some good advice from someone like the CAB you should be OK.

[Costumier]

Johnopaulo,
You can work under 16hrs per week and earn up to £93 per week and not lose your benefits. Your Housing Benefit may be affected. Its called 'Permitted Work' and its to enable you to develop a business idea/try out employment. The Benefits Agency should be able to help you do this ( for up to a year) and then move on to WTC.
I'm doing a similar thing - but in my case I can only earn £20 per week, so i'm hoping to move to WTC and more hours very soon. Be warned though - its a minefield of conflicting information!