Self Employed & Benefits

Yumiyumi wrote: »

Hi everyone, pretty new to all this....my story.....I am currently receiving JSA and getting mortgage interest help, I am planning to start my own catering business from home but I know that it will take time to build up a decent income. Can I still receive help with my mortgage interest if I am on a low income? Oh I have 4 crazy kids too.......

Hi, At Last!! Someone is taking responsibility for themselves. It is very refreshing to find people like you that want to 'get on' instead of relying on a lifestyle linked to benefits.

Right let's see if I can throw some ideas your way.

As far as I remember (and all this will no doubt change in due course because of the Government cut backs - but in your case it may go the other way!) yes you can start a business whilst claiming JSA. It used to be if you worked less than 16 hours per week. The reason being that by claiming JSA, you are confirming that you are actively looking for work and that what you are doing in the meantime will not affect your chances of taking that work.

Then, as it seems, you are on 'Income based' JSA which is means tested. So apart from a small amount you can earn before it affects your benefit -

JSA weekly earnings will be treated in the following way:

• £5 is ignored for single claimants;
• £10 is ignored for unemployed couples (even if only one partner is working);
• £20 is ignored for lone parents, people with disabilities and carers.

Earnings above these amounts will reduce your benefit pound for pound.
Maintenance and Child Benefit are disregarded.

If you lose your benefit (a) because you work more than 16 hours pw (b) because you earn too much - you will lose the help with the mortgage interest.

However, earnings from self employment does not mean 'turnover - gross income' it means what is left for you AFTER all of the legitimate business expenses have been paid.

You may however fall foul of the 16 week rule as follows:

Say you actually spend 12 hrs pw baking, delivering etc. It could and will possibly be argued that the time you spend on the phone looking for work and all time you take to carry out the admin side, bookeeping etc, will be additional time spent that could take you over the limit.

Have a look at the Tax Credit website (HMRC) as it may be worth working over the 16 hours and claiming tax credits instead of JSA.
You could also argue with HMRC that the time spent over and above just the baking etc takes it to over 30 hours pw - even better for Tax Credits.
Oh yes you must register your business with HMRC, possibly go to one of their workshops re accounting etc, and claim exemption for paying stamp due to low earnings.

A lot to take in I know, but play around also with the website 'entitledto' .