Claiming both Job seekers Allowance and Tax Credits possible?

buggu · 29 January 2010 at 10:11PM

Hi

i will be made redundant pretty soon from my job, was wondering :

a) how would my redundancy payment affect my job seekers allowance claim

b) can i go self employed at the same time and still benefits.

Its just that i want to avoid spending 8 months just looking for a job (which i did last time i was out of work and did not like it one bit) and i want to go back to selling stuff on ebay as i have done that over a year ago whilst being in my current job but am worried i might not make enough early on to support my family (got 2 kids). It will be no more than 16 hours a week.

Is that what these "new deal" schemes are? where they help you if you want to go self-employed but i read that you need to claim JSA 6 months before they would even consider you.

c) How would my claim for tax credit be affected.
i assuming they will look at my earnings from my job for the last year.

d) How would my Ni contributions be affected.
just want to have the maximum contributions payed whilst i,m signing on.

sorry for all the questions.

Robbie64 · 29 January 2010 at 10:19PM

you can't get Working Tax Credit and JSA at the same time as you need to work 16+ hours for the former and under 16 hours to get the latter. You can get Child tax Credits while signing on though.

If you work 16 hours a week trading on ebay (include all time spent doing this, including even things like time spent going to the post office) then claim tax credits as technically you should not be getting JSA. At the very least you'll need to declare your ebay trading if it is a regular source of income.

buggu · 29 January 2010 at 10:32PM

thanks for the reply

yes i,m looking to declare everything just dont think it be a steady income to rely purely on it.

so if i decide to just claim working tax credits would they look at my previous year income from my job or what i,m make on ebay.

Robbie64 · 29 January 2010 at 10:56PM

The starting point is that they will look at income from the last full tax year. This is the initial assessment and if your circumstances have changed you can ask them to look at your claim once again. However you may still not get much as we are now 10 months into the tax year. You might be better off signing on for a couple of months and waiting until April to claim Working Tax Credit. Again, your initial assessment will be need to be changed but you may be able to claim a lot more tax credits on a revision.

Additionally, while your child tax credit will have been worked out for this tax year, if you claim income based Jobseekers Allowance you will get the maximum weekly amount of child tax credit. This will depend on whether you can claim income based JSA though - I'm assuming you're married / living with a partner and your partner doesn't work. if so then a claim to income based JSA will depend on how much savings (including most of your redundancy money) you and your partner have.

karenx · 29 January 2010 at 11:02PM

Remember while being self employed you are only asked to make class 2 NI contributions, and this isnt enough if you later decide not to do the ebay work and go onto JSA again. You need to be paying more than the basic amount. If you claim housing benefit also they will need proof of how much you are earning, as your award goes on your household income. If earning you wont get the maximum payable so will you be able to make up the short fall.
It seems good at first going self-employed but you need to think beyond that and whether you will make enough to cover these things. Also you will need to do tax returns, so be prepared for a bill at the end of the tax year so maybe putting some money aside every week will help for that

PasturesNew · 29 January 2010 at 11:08PM

karenx wrote: »

Remember while being self employed you are only asked to make class 2 NI contributions, and this isnt enough if you later decide not to do the ebay work and go onto JSA again. You need to be paying more than the basic amount. If you claim housing benefit also they will need proof of how much you are earning, as your award goes on your household income. If earning you wont get the maximum payable so will you be able to make up the short fall.
It seems good at first going self-employed but you need to think beyond that and whether you will make enough to cover these things. Also you will need to do tax returns, so be prepared for a bill at the end of the tax year so maybe putting some money aside every week will help for that

If you are self-employed, you pay Class 2 NICs, at £2.40/week. But if you earnings are super-low, you can apply to not pay this. Once you earn more than about £5700 you additionally have to pay Class 4 NICs at 8% of everything over the threshold. So it's not as black/white as it seems.

If most of your income comes from self-employment (I think it's more than 75%) then not only do you have to pay tax on the tax return you are just completing, but you also have to pay some "up front/on account" for the next year, which is OK because by then you've already earnt the money you're paying ahead for ... unless you spend everything as it comes in.

Owain_Moneysaver · 29 January 2010 at 11:58PM

This may not be true for all Tax Credits, but there may be a 4-week run-on period after leaving work where you still get the Tax Credit payments, but are also claiming JSA.

buggu · 30 January 2010 at 6:05AM

so should i go down the route of signing on for JSA and start my ebay business and let the job center making the necessary adjustments and when i feel i,m getting a regular income, sign off JSA and claim tax credits. This way i will be paying maxium contributions and if things dont work out or i find a good job i wouldnt be worse off.

I,m currently only getting just over £2 in working tax credit and seems like i,lll be made redundant in april as they have to give me 10 weeks notice. so if i read it right, it be next april before the tax office woudl revaluate my situation?

DX2 · 30 January 2010 at 8:49AM

buggu wrote: »

I,m currently only getting just over £2 in working tax credit and seems like i,lll be made redundant in april as they have to give me 10 weeks notice. so if i read it right, it be next april before the tax office woudl revaluate my situation?

No you are not reading that correct.
Tax credits can look at your award anytime, the tax year begins in April.

Claiming both Job seekers Allowance and Tax Credits possible?

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