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  • FIRST POST
    • itsnotmeagain
    • By itsnotmeagain 29th Dec 15, 2:27 PM
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    itsnotmeagain
    New rules for claiming working tax credits self employed
    • #1
    • 29th Dec 15, 2:27 PM
    New rules for claiming working tax credits self employed 29th Dec 15 at 2:27 PM
    Just had a letter from HM Revenue informing us about changes to Working Tax Credits.

    It goes on to say that to be eligible for Working Tax Credits
    you should be getting paid or expect to get paid for your self employed work.
    your self employment should be done on a commercial basis with a view to making a profit.

    Now my issue is that my wife is disabled and she started a small online business about five years ago as it would be therapeutic for her condition, we treat it as a business keeping all paperwork & filing returns but it barely breaks even and she does not take a wage.

    Looking at the letter it looks as if we would lose the Working Tax Credits, is this correct ?

    Thanks in advance
Page 4
    • Darksparkle
    • By Darksparkle 31st Dec 15, 9:32 PM
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    Darksparkle
    ESA is an out of work benefit.

    You can't work for 16 hours or more and claim ESA. You could work less than 16 hours but earn more than £104 and that too would disqualify the claimant from ESA.
    Originally posted by HappyMJ
    But you are referring to permitted work higher limit. They are claiming under the lower limit which does not mention working hours, only that it must be less than £20.
    • Icequeen99
    • By Icequeen99 31st Dec 15, 9:46 PM
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    Icequeen99
    But you are referring to permitted work higher limit. They are claiming under the lower limit which does not mention working hours, only that it must be less than £20.
    Originally posted by Darksparkle
    Nannytone - DS is right.

    I agree that it doesn't make sense - one is for out of work the other in work.

    As I said above, they probably didn't think anyone could work more than 16 hours and earn under £20 so they didn't set an hours limit. The hours limit is for the higher limit, it is not for the £20 limit.

    The issue here is most likely that Sherbet's self-employment just won't meet the WTC new rules.

    I wonder also whether he is getting IRESA or CBESA or both. WTC is counted as income for IRESA.

    IQ
    • nannytone
    • By nannytone 31st Dec 15, 10:47 PM
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    nannytone
    he transferred from incapacity benefit so would assume that its cont based .

    howmuch wtc would be involved on a weekly income of £20.

    I'm just thinking of the rule that reduces ESA cont based when a pension of more than £85 is received, surely this would apply if wtc is over £65?
    • sherbert17
    • By sherbert17 31st Dec 15, 11:07 PM
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    sherbert17
    I receive Cont Based ESA, previously it was Incapacity Benefit,


    Taken from the original post above

    It goes on to say that to be eligible for Working Tax Credits
    you should be getting paid or expect to get paid for your self employed work.
    I do get paid for my SE work.
    your self employment should be done on a commercial basis with a view to making a profit. I do make a profit, however small or I wouldn't be doing it, oh though I probably actually would as it is one thing I can actually do, and do it well. I take pleasure in my work but if I were to look elsewhere out of the home for a job, I would fall at the first hurdle as it would mean that I would have to interact with people. I never leave my home just now. If I am found to not be able to claim WTC, I wouldn't be here though I could get supporting evidence from my GP as to why I can't work more hours and outside the home.

    There should be procedures in place to support people with at least mental health issues as I am sure there are 1000's suffering that can not leave their home to work. My CPN orginally got me started with self employment and ESA and WTC as she at the time could see a benefit in my doing it - she was right.

    I may take a long time doing what I do, but that is also down to other medical problems that I have. What might take somebody 1 hour to do, can take me 3 times as long. I am currently on an indefinate award for both ESA and DLA. I could look at changing my DLA to PIP but have heard awful things about how difficult it is to get PIP, so I have held off for the moment.
    • FBaby
    • By FBaby 1st Jan 16, 9:00 AM
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    FBaby
    Do you actually need the additional money you get from tax credits? ESA and DLA and other benefits are supposed to ensure disabled people have enough to live in and indeed I think with HB and the rest of it is the equivalent of a net salary much above average.

    Could you consider ending your WTC claim? You could still do your work if it helps your MH and declare your profit for the purpose of ESA and then it would be a big weight of your shoulders taking away a level of anxiety that it sounds you could do without.

    As said yyou might have an over payment but one you'll be able to repay on a very long term basis anyway.
    • Icequeen99
    • By Icequeen99 1st Jan 16, 9:00 AM
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    Icequeen99
    Nannytone - WTC is not relevant for CBESA, it is only taken into account for IRESA.


    Sherbert - if you are investigated, you need to flag up to them that the work actually takes you longer due to your disability, therefore that should be taken into account when determining your hours worked. I have argued that in a previous case where the person had a physical disability that meant it took them double the time to do a task than it would normally take. That may not satisfy them as to the amount you are charging or the commercial nature but it is relevant.

    IQ
    • tomtontom
    • By tomtontom 1st Jan 16, 11:37 AM
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    tomtontom
    I receive Cont Based ESA, previously it was Incapacity Benefit,


    Taken from the original post above

    It goes on to say that to be eligible for Working Tax Credits
    you should be getting paid or expect to get paid for your self employed work.
    I do get paid for my SE work.
    your self employment should be done on a commercial basis with a view to making a profit. I do make a profit, however small or I wouldn't be doing it, oh though I probably actually would as it is one thing I can actually do, and do it well. I take pleasure in my work but if I were to look elsewhere out of the home for a job, I would fall at the first hurdle as it would mean that I would have to interact with people. I never leave my home just now. If I am found to not be able to claim WTC, I wouldn't be here though I could get supporting evidence from my GP as to why I can't work more hours and outside the home.

    There should be procedures in place to support people with at least mental health issues as I am sure there are 1000's suffering that can not leave their home to work. My CPN orginally got me started with self employment and ESA and WTC as she at the time could see a benefit in my doing it - she was right.

    I may take a long time doing what I do, but that is also down to other medical problems that I have. What might take somebody 1 hour to do, can take me 3 times as long. I am currently on an indefinate award for both ESA and DLA. I could look at changing my DLA to PIP but have heard awful things about how difficult it is to get PIP, so I have held off for the moment.
    Originally posted by sherbert17
    There is support in place - that is permitted work.

    Even allowing for your disability meaning the work takes you three times as long that would only take you to £3 an hour. No viable business would succeed in the long term on such a low rate, at least not one that is not manipulating the system. I'm not suggesting that is your intention, but that's what it is.

    Do you not feel manipulated by the person that is only paying you £1.10 an hour for your work? If an employer suggested doing that there would be an outcry!
    • UnderPressure
    • By UnderPressure 3rd Jan 16, 11:40 AM
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    UnderPressure
    We got one of these letters in between Christmas and New Year, I just put it to one side thinking I will look into it in January and have done today, slightly different for us, partner is "non hobby" self employed just about to go into her 3rd full year, ,slow and steady growth she declares 30 hours worked but in actual fact works more like 60 so no worries there, have all records required etc though admittedly could do with being better organised, she is going to turn her attention to that this month.

    Profit, well not an easy thing to achieve but none the less she has, year 1 was a nominal few thousand ish, year 2 was 130% growth on year 1 leaving her within about £1 per hour of NMW, this year has been a bit slower but she is still on target to match last year if not a very small increase but she will still be around £1 per hour short of NMW and even more come April, she has a clear plan and is always marketing to find more business, this has been ramped up over the last couple of week and she is expectant of good results, we will see always had great success with Adwords but had an epic failure in December with it costing a few hundred quid! Strange times.........

    Anyway I cannot imagine for 1 minute HMRC having any serious concerns over my partners business even though she will be "officially" around £1 per hour short of NMW and a bit more come April she is also about to take on her first 2 employees this Spring on real contracts with real hours so if she is the kind of business they are "targeting" then so be it, what can you do? Not a lot, they will make a decision and we will have to live with it either way, we will manage short term if we have to and long term is looking rosy as any business really should look so not all that concerned and NOT going to allow it to stress me

    Happy New Year y'all
    "You can measure a man's character by the choices he makes under pressure"
    Sir Winston Churchill
    • Becles
    • By Becles 3rd Jan 16, 1:00 PM
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    Becles
    I assume by that you mean you work less than 16hrs so aren't eligible for WTC?
    Originally posted by Darksparkle

    No I work full time. I can't support my children and a mortgage on less than 16 hours a week!

    I've not had a letter so I'll stop panicking
    Here I go again on my own....
    • Darksparkle
    • By Darksparkle 3rd Jan 16, 1:02 PM
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    Darksparkle
    No I work full time. I can't support my children and a mortgage on less than 16 hours a week!

    I've not had a letter so I'll stop panicking
    Originally posted by Becles
    If you work full time then you must also have a WTC claim. Even if the WTC is reduced to nil due to your income, you still have a claim for it.

    However their checks are mainly into those claiming WTC but not earning NMW.
    • Becles
    • By Becles 3rd Jan 16, 6:34 PM
    • 12,809 Posts
    • 25,592 Thanks
    Becles
    If you work full time then you must also have a WTC claim. Even if the WTC is reduced to nil due to your income, you still have a claim for it.

    However their checks are mainly into those claiming WTC but not earning NMW.
    Originally posted by Darksparkle
    I get the annual award letter with child tax credits on but it says nothing is payable for WTC so I just assumed that meant I wasn't entitled to it. Apologies for using the incorrect wording.
    Here I go again on my own....
    • Darksparkle
    • By Darksparkle 3rd Jan 16, 7:13 PM
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    Darksparkle
    I get the annual award letter with child tax credits on but it says nothing is payable for WTC so I just assumed that meant I wasn't entitled to it. Apologies for using the incorrect wording.
    Originally posted by Becles
    No problem. Make sure the award does still show your work details and the WTC elements. You still get them included even if reduced to zero and can make a difference.
    • FRESTER
    • By FRESTER 12th Jan 16, 3:27 AM
    • 380 Posts
    • 104 Thanks
    FRESTER
    Has anyone had a compliance check yet who got one of these letters after Christmas ?

    We are going away for two weeks today and its always my luck it will arrive the day we go lol and we will miss the deadline !
    • rizvan786
    • By rizvan786 10th Oct 16, 6:58 PM
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    rizvan786
    Hi i need some advice, i put my claim in for working tax credit on January 20th 2016 then i had a child in May this year. My tax credits are still not through i earnt about £9000 for tax year 15/16 and then i got asked for evidence of self employment which i sent through then got told im not entilted to anything as my income was £21000 which it isnt and now i told them my income and they are saying its gone to the complex case team. Im really frusted i need some advice and whats going to happen next.
    • Darksparkle
    • By Darksparkle 10th Oct 16, 7:26 PM
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    Darksparkle
    Hi i need some advice, i put my claim in for working tax credit on January 20th 2016 then i had a child in May this year. My tax credits are still not through i earnt about £9000 for tax year 15/16 and then i got asked for evidence of self employment which i sent through then got told im not entilted to anything as my income was £21000 which it isnt and now i told them my income and they are saying its gone to the complex case team. Im really frusted i need some advice and whats going to happen next.
    Originally posted by rizvan786
    Where did they get the figure of £21,000?

    Why are you considered a complex case? Normally that's only used for cross border workers and other "complex" claims.
    • rizvan786
    • By rizvan786 10th Oct 16, 7:36 PM
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    rizvan786
    They said its a estimate figure where they got it from i dont know. They referred my case to complex team when i told them what my actual income is. This is the 100th time my case has been referred.
    • dktreesea
    • By dktreesea 11th Oct 16, 2:20 PM
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    dktreesea
    I can't quote legislation but the Gov. website clearly states that the profit made per hour should be at least the NMW. (December 2015)

    https://www.gov.uk/working-tax-credit/eligibility

    In the OP's wife situation this is clearly not a start up business and although they keep business records no profit or very little appears to be made. it seems that this business would be subject to investigation.
    Originally posted by pmlindyloo

    Not quite. It says if your profit isn't equivalent to the NMW, presumably for the hours, if any, you are required to work, then the tax office may ask for various records/a business plan.
    • dktreesea
    • By dktreesea 11th Oct 16, 2:24 PM
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    dktreesea
    I do not work i`am my wife`s carer, we have three children so receive Child Tax Credits, wife is in receipt of high rate DLA care & mobility, we were encouraged to start & run our business like this by the job centre with them knowing we would not be able to pull a full wage,

    Curious to know what HMRC steps would be as can not increase turnover without capital investment
    Originally posted by itsnotmeagain

    It doesn't mean the business isn't viable - just that it takes longer to build up to make a decent profit.


    I think your WTC will be okay, but if the self employed get moved onto UC (I would say "when" but can't really see when the "when" will ever be) then they could treat her as having to earn whatever hours she is required to work times the NMW, in which case, if her profit doesn't exceed that, deeming rules come into play. So for UC purposes, they will treat her as having that profit whether she has it or not.


    Are you sure though, she is required to work at all?
    • Darksparkle
    • By Darksparkle 11th Oct 16, 2:45 PM
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    Darksparkle
    Not quite. It says if your profit isn't equivalent to the NMW, presumably for the hours, if any, you are required to work, then the tax office may ask for various records/a business plan.
    Originally posted by dktreesea
    Just to say that you are quoting posts from December. Just in case you hadn't noticed.
    • dktreesea
    • By dktreesea 11th Oct 16, 6:16 PM
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    dktreesea
    Hi i need some advice, i put my claim in for working tax credit on January 20th 2016 then i had a child in May this year. My tax credits are still not through i earnt about £9000 for tax year 15/16 and then i got asked for evidence of self employment which i sent through then got told im not entilted to anything as my income was £21000 which it isnt and now i told them my income and they are saying its gone to the complex case team. Im really frusted i need some advice and whats going to happen next.
    Originally posted by rizvan786

    What was your income in the 2014/15 year? The HMRC sometimes take a long, hard look if your income drops by a substantial amount if you are self employed.


    Having said that, we once had a couple of HMRC inspectors out to our business who had done heaps of analysis. Not sure what they came up with but their first question was about our cash income and expenses we had paid for with cash. (we vary rarely have any - it's not that kind of business).
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