Self Employed and Claiming Working Tax Credits

Discussion in 'Accounts & Finance' started by Voddiemonster, Jul 10, 2007.

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  1. Voddiemonster

    Voddiemonster UKBF Newcomer Free Member

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    Is anyone else self employed and claiming working tax credit?

    I was advised by a friend that because i am just starting out and I have no capital or savings that I could put down Zero income but claim my hours. I would then be entitled to full tax working tax credits. Does this sound right?

    I am just concerned because i have had so much trouble with working tax credits before and i am still trying to get back working tax credits due to me since January, whilst working full time in the NHS so when i do make my change of circumstances, i want to ensure that i do get things right and maybe they wont make any errors this time.

    I have two children under 16 and i am a single parent if that helps.

     
    Posted: Jul 10, 2007 By: Voddiemonster Member since: Jul 10, 2007
    #1
  2. miketombs

    miketombs UKBF Enthusiast Free Member

    536 29
    You're certainly entitled to claim WTC whilst you're self-employed. It's usually based on the previous year's income, but if (as in you case probably) there will be completely different circumstances, I imagine you can give an estimate for the current year. That won't be zero though, it will be your expected profit.
     
    Posted: Jul 20, 2007 By: miketombs Member since: Jan 13, 2007
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  3. Voddiemonster

    Voddiemonster UKBF Newcomer Free Member

    26 3
    Many thanks for the advice. I mentioned the Zero income as i was informed that when you are starting a business from scratch that the inland revenue does not expect you to make any profit within the first year of business. Not sure if the advice i have been given is right but that is what i have been told.
     
    Posted: Jul 20, 2007 By: Voddiemonster Member since: Jul 10, 2007
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  4. carey bookkeeping

    carey bookkeeping UKBF Newcomer Free Member

    196 24
    Hi, You are just down the road from me!
    Be very careful about putting a 'zero' income. Although this may well end up the case in your first year of trading. If your business did make a profit ie £2000 then that is your earnings for the year. Its best to keep a track of profit over the year and update Child Tax Credits regularly so they can change and amend the claim. You dont want to end up paying any of it back!
    But yes you would be entilied to it so go ahead and claim but just watch as the year progresses.
     
    Posted: Jul 21, 2007 By: carey bookkeeping Member since: Mar 2, 2007
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  5. Voddiemonster

    Voddiemonster UKBF Newcomer Free Member

    26 3
    Thanks for the support Judith. Oh another Southampton lass *waves*
    Yeah i know i will have to be careful. In the last 6 years they have messed up my working tax credits 8 times. Each time they have underpaid me and i have had to chase money i have been owed. They have forced me out of work for the 2nd time in 3 years due to this andthe simple fact that without that money i could not afford childcare. Instead of going on income support this time i thought i would go self employed and try my own venture.

    Dont get me wrong im not rushing into all this with my eyes shut. I have thought long and hard about working from home self employed for a number of years. I would have just liked to do it my time and not through there mess ups. But then again i could look at it as they pushed me in at the deep and i always seem to work better on that basis anyway lol.

    Some times bad things happen for a reason and i believe you can turn most negatives in to a positive. I may even bring some business your way once i crack on and get going.

    Have a fab weekend.

    Gina x
     
    Posted: Jul 21, 2007 By: Voddiemonster Member since: Jul 10, 2007
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  6. louise.ann

    louise.ann Guest

    1 1
    hello people
    i have justcome out of employment but starting self employed on monday 16th doing the similar job (travel agent) i do any way get workingtax credits and child tax credits because i have a baby but live with partner too. Will i still be entitled to gett he same amount i get now or will i be entitled to more working tax credit seems though i wont be earning as much as when i was employed, becauseit is commission based only??? thankyou
     
    Posted: Feb 10, 2009 By: louise.ann Member since: Feb 10, 2009
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  7. Echo's

    Echo's UKBF Newcomer Free Member

    21 5
    You can give an estimated earnings figure for the year, i think the deadline is july. then give the actual earnings by end of Jan. Always best to over estimate and get a back payment in the january than under estimate and owe them.

    You can earn about £8000 i think before the credits start being reduced.
     
    Posted: Feb 11, 2009 By: Echo's Member since: Nov 21, 2007
    #7
  8. lukealan22

    lukealan22 UKBF Newcomer Free Member

    2 0
    The figure you put down is what you assume you will earn after all your sef employed deductions. The final figure that you will pay tax on so I am self employed and after deductions i earnt zero as i only earn about 5k a yr and it isnt even my tax allowance before my stock or petrol etc. Being your first year you have to estimate what you think the figure will be an accountant can advice you if your not sure. I hope this helps
     
    Posted: Feb 11, 2009 By: lukealan22 Member since: Feb 11, 2009
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  9. TraceyAnn

    TraceyAnn UKBF Newcomer Free Member

    95 15
    My husband and I are both self employed so our income varies from year to year. I found that if you give them the estimated proft figures as soon as you can then keep them upated with the final figures they have always been very helpful to us. And yes I did get a bill saying I owed them £4000 one year but this was dealt with quite quickly once they received the relevant income for each of the years involved.

    Good luck for the future!:)
     
    Posted: Feb 12, 2009 By: TraceyAnn Member since: Dec 8, 2008
    #9
  10. Bridget1968

    Bridget1968 UKBF Newcomer Free Member

    96 4
    On the tax credits forms when you are self employed do you declare your profit (income less expenses) or taxable profit (income,less expenses, less personal tax allowance )

    ????????????????????????????????????
     
    Posted: Feb 12, 2009 By: Bridget1968 Member since: Oct 17, 2007
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  11. TraceyAnn

    TraceyAnn UKBF Newcomer Free Member

    95 15
    net profit less personal pension payments plus any interest received
     
    Posted: Feb 12, 2009 By: TraceyAnn Member since: Dec 8, 2008
    #11
  12. Bridget1968

    Bridget1968 UKBF Newcomer Free Member

    96 4
    is that net profit after your personal tax allowance has been deducted and therefore the figure you are taxed on?
     
    Posted: Feb 12, 2009 By: Bridget1968 Member since: Oct 17, 2007
    #12
  13. Jenni384

    Jenni384 UKBF Big Shot Full Member

    4,852 1,541
    No, don't take of the personal allowance.
     
    Posted: Feb 12, 2009 By: Jenni384 Member since: Oct 1, 2007
    #13
  14. ginantonic

    ginantonic UKBF Newcomer Free Member

    952 130
    I've been self employed for 4 years and claiming Tax Credits. Haven't had any problems with them. The 1st year was based on my previous year on PAYE, then I averaged out what I'd earned from SE and they used that figure. Every year since, I have just updated them with an average of my earnings and they've been OK with that. This year I had slightly increased income, and they are adjusting my TC to reflect this. I agree, as long as you keep them updated you're OK. If you also claim any Housing/Council Tax benefit, you must make them aware of any increase in the amount of TC paid to you, as it apparently is not done automatically, as I found out, and had to pay a considerable amount back A genuine mistake on my part, but I had to be interviewed, as they thought I was committing fraud!
    To complicate matters further, I occasionally do some PAYE work, too, and that is also taken into account.
     
    Posted: Feb 12, 2009 By: ginantonic Member since: May 23, 2008
    #14
  15. stphnstevey

    stphnstevey UKBF Regular Free Member

    239 7
    Isn't it something like £20,000 your income can change by and they won't change your tax credits?

    Do you pay interest to them if you owe them? If not, then it is efectively an interest free loan - solong as you don't need to spend the money ;)
     
    Posted: Feb 14, 2009 By: stphnstevey Member since: Sep 2, 2008
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  16. Jenni384

    Jenni384 UKBF Big Shot Full Member

    4,852 1,541
    Yes, it's either 20k or 25k, I can't remember offhand.
    Eg, year 1, income £10k, award is based on 10k.
    Year 2, award based on 10k from last year, actual income 15k, extra 5k disregarded and no overpayment occurs.
    Year 3 award based on 15k, actual income 12k, at end of year extra award issued for lower income.

    If, however, income in Year 1 10k and in year 2 you think income will be 5k, you can ask them to base award on 5k.
    If income is actually 7k then an overpayment will have occurred - as last years income was higher than 7k.

    Nope. :)
    And if there is an overpayment you can pay them back over a year at £x per month :)
     
    Posted: Feb 15, 2009 By: Jenni384 Member since: Oct 1, 2007
    #16
  17. stphnstevey

    stphnstevey UKBF Regular Free Member

    239 7
    Useful if you want to take a low salary or dividend during a year for what ever reason and keep the money in the company.
     
    Last edited: Feb 15, 2009
    Posted: Feb 15, 2009 By: stphnstevey Member since: Sep 2, 2008
    #17
  18. Jenni384

    Jenni384 UKBF Big Shot Full Member

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    Yes, but remember if you are claiming WTC, any salary from the company has to be at NMW.
     
    Posted: Feb 16, 2009 By: Jenni384 Member since: Oct 1, 2007
    #18
  19. stphnstevey

    stphnstevey UKBF Regular Free Member

    239 7
    Even for director's (where NMW rules don't normally apply)?
     
    Posted: Feb 16, 2009 By: stphnstevey Member since: Sep 2, 2008
    #19
  20. Jenni384

    Jenni384 UKBF Big Shot Full Member

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    Yes
    Big discussion on it here.
     
    Last edited: Feb 16, 2009
    Posted: Feb 16, 2009 By: Jenni384 Member since: Oct 1, 2007
    #20
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