I'm confused, very confused - IB and Self Employed issue

SteveCat

Long story and would love some advise please: A few years back I had an accident and damaged my spine, since then I have been diagnosed with fibromyalgia and Thyroid Disease. Healthwise not very good however at the time of my accident I had a business of sort letting property which I still do, I also had a Building and Maintenance Business which I have given up. Due to this I had to claim Incapacity Benefit to survive as I'm a single Dad and still do. My question is am I breaking any laws or rules running a Business of this kind whilst claiming IB? I ask as the Business has never been profitable, its really a vehicle to replace my Pension for later life. Since my accident and ill health every years accounts has shown a loss through my accountant. Therefore I guess my question is are you ok running a Business with no profit whilst claiming IB or is it another case of understanding the permitted work issue? Technically I am not actually doing any work.
I am just very confused as I have read the other website all about Benefits etc and now feel I'm doing something wrong. My accountant says not as IB is not means tested but is Taxable income. With this does the permiteed work rules apply if you are self employed? I really do not understand anymore. Please help someone!

zzzLazyDaisy

Hi, if you do the work of letting the property yourself, then it falls within the permitted work rules.

BUT if you employ a managment agent to deal with the lettings on your behalf, then it is investment income and not earnings from employment (or self-employment), and so does not count for IB purposes, as IB is not means tested.

hope this helps

Daisy

SteveCat

zzzLazyDaisy wrote: »

Hi, if you do the work of letting the property yourself, then it falls within the permitted work rules.

BUT if you employ a managment agent to deal with the lettings on your behalf, then it is investment income and not earnings from employment (or self-employment), and so does not count for IB purposes, as IB is not means tested.

hope this helps

Daisy

I don't think thats right otherwise my accountant would have said so, plus its investment income whichever way you look at it. It doesn't become investment income just because an agent is collecting your rent and managing tenants.

TinaStimson

Hi The only safe way you are going to find out if this is permittable is to tell the benefit agency and ask for their advice. If you are not able to claim this benefit because you are classed as earning there maybe other benefits that you can claim. Have you put in a claim for DLA if you are under 65 or AA if you are over 65. It is worth a phone call to have a full benefit review from the benefit advisors office in your area, they are normally in the phone book.

I help people fill out the forms for benefits and it is a complete nightmare all round, but my advice is, check it out before someone checks you out and you are deemed to be defrauding the benefit system - which can be a prisonable offence and you will ahve to pay back all the money the benefit agency say you have received fraudulently.
Tina

zzzLazyDaisy

SteveCat wrote: »

I don't think thats right otherwise my accountant would have said so, plus its investment income whichever way you look at it. It doesn't become investment income just because an agent is collecting your rent and managing tenants.

The point is the 'work' element. Incapacity Benefit is for incapacity for work. If you are capable of working, you are not entitled to Incapacity Benefit - apart from certain exceptions which are covered by the permitted work rules.

If you have investments that you pay other people to manage, in other words you are not personally involved in work in connection with those forms of work, then that income does not affect IB, because it is not means tested.

So, a millionaire with thousands of pounds of income from savings and investments would still be entitled to IB, provided s/he met the relevant qualification criteria. But if that person was actively involved in working in the investment business that managed the investments, then that would count as work, and the permitted work rules would apply.

It is the income from work that is the issue, not income per se.

However, as the previous poster pointed out, you need to clear this with the DWP, if they are happy with what you are doing they will put a note on your computer file - then, if someone subsequently 'shops' you to the DWP, they will already know the situation. It isn't worth the risk.

SteveCat

zzzLazyDaisy wrote: »

The point is the 'work' element. Incapacity Benefit is for incapacity for work. If you are capable of working, you are not entitled to Incapacity Benefit - apart from certain exceptions which are covered by the permitted work rules.

If you have investments that you pay other people to manage, in other words you are not personally involved in work in connection with those forms of work, then that income does not affect IB, because it is not means tested.

So, a millionaire with thousands of pounds of income from savings and investments would still be entitled to IB, provided s/he met the relevant qualification criteria. But if that person was actively involved in working in the investment business that managed the investments, then that would count as work, and the permitted work rules would apply.

It is the income from work that is the issue, not income per se.

However, as the previous poster pointed out, you need to clear this with the DWP, if they are happy with what you are doing they will put a note on your computer file - then, if someone subsequently 'shops' you to the DWP, they will already know the situation. It isn't worth the risk.

I am not working though, as I said they are investment vehicles. There is no income from work at all. Its income from investments which I thought I made clear, thats the only reason I pay tax on it as everyone does. Yet again it would seem the 'experts' are unable to answer my question due to not understanding the issue.

zzzLazyDaisy

The confusion arose because you described yourself as 'self employed' and 'running a business' which implies that you are working.

If you are working, then the permitted work rules apply.

If you are not doing any work, and the income is purely from investments only, then the permitted work rules do not apply.

Sorry, I can't put it any clearer than that.

The people on this board don't profess to be 'experts' just ordinary people with lots of experience on disability related matters, who are happy to help each other out and share the knowledge they have gained.

If you remain confused, or continue to have doubts about your situation, then the 'experts' are the people at the DWP who, in my experience, are extremely helpful in these situations.

Good luck, I hope you find the answers you are looking for.

regards

Daisy

SteveCat

TinaStimson wrote: »

Hi The only safe way you are going to find out if this is permittable is to tell the benefit agency and ask for their advice. If you are not able to claim this benefit because you are classed as earning there maybe other benefits that you can claim. Have you put in a claim for DLA if you are under 65 or AA if you are over 65. It is worth a phone call to have a full benefit review from the benefit advisors office in your area, they are normally in the phone book.

I help people fill out the forms for benefits and it is a complete nightmare all round, but my advice is, check it out before someone checks you out and you are deemed to be defrauding the benefit system - which can be a prisonable offence and you will ahve to pay back all the money the benefit agency say you have received fraudulently.
Tina

I actually described it as a 'Business of sort' if it was a Business as you probably feel it is then it would be paying me a wage. It does not! It collects taxable Rent from Investment Property that is all. I must admit I do want to come off these Benefits but not for this reason, I actually want to start a income based Business but am being put off due to the serious lack of advise that is around. I actually went to a meeting a little while back and this topic arose regarding permitted work on Benefits, the conclusion was that even the advisors don't know the rules. In summary because of it the claimants all decided they wouldn't enquire about what to do due to the fear of losing their already Benefits. Its ridiculous and advise on calling my local Benefit office puts the fear of god into me as they really don't know their !!!!!! from their elbows.

foxxymynx

Truthfully, I'd advise you to give http://www.opportunities.org.uk/ a call - they'll advise you better than any of us - including about starting your own business - they'll even help you!

It may be classed as work but permitted work.

SteveCat

foxxymynx wrote: »

Truthfully, I'd advise you to give http://www.opportunities.org.uk/ a call - they'll advise you better than any of us - including about starting your own business - they'll even help you!

It may be classed as work but permitted work.

Thanks for that I will, never heard of them before so its got to be worth a try. Just another thought but I always thought you could do some work indefinantly as long as you did not earn anymore than £20.00 a week. Now reading various websites this appears to be under the permitted work rules, is that the case or can you earn £20.00 a week but not under 'permitted'? My accountant told me this and said it was brought in to aid the self employed more than anyone.

foxxymynx

SteveCat wrote: »

Thanks for that I will, never heard of them before so its got to be worth a try. Just another thought but I always thought you could do some work indefinantly as long as you did not earn anymore than £20.00 a week. Now reading various websites this appears to be under the permitted work rules, is that the case or can you earn £20.00 a week but not under 'permitted'? My accountant told me this and said it was brought in to aid the self employed more than anyone.

Truthfully, I have no idea what the score is, though I think you may be right. I'm out of my league on this kind of stuff, I just know where to seek advice if that makes sense?