register self employed now or wait until the new tax year?

tyllwyd

When it comes to the expenses, you will need paper copies to back everything up - so keep all your receipts, copies of bank statements etc. I didn't think it was absolutely vital to pay everything out of the same account, as long as you had a good paper trail of where the money had come from. If you can't put money into the business account up front, it was me I think I'd pay everything on my credit card, then when I got paid into the business account, make a payment to the credit card to cover all the business expenses. As long as it was clear what you'd done, wouldn't that be OK?

I don't think tax credits go on your self-assessment form - its the other way round, you give the tax credit people the information on your annual earnings, and then they adjust the tax credit up or down accordingly. But if your income is a lot more or less than the estimated figure you give them, beware of them under or over paying you.

tyllwyd

Thinking about it, I'm confused that you are saying the tax credits are a benefit? If you are already working 25 hours a week, aren't you already entitled to working tax credit - in which case extra income from self-employment would decrease the amount you received, not increase it?

qw3rt7

No kids, so would need to work over 30 to get tax credits. When going self employed i will be working over 50, so then i qualify. I have never received any kind of benefit before, so was a bit confused about tax implications.
Also, i am only 25 so would have been too young to claim tax credits in the past.

tyllwyd

qw3rt7 wrote: »

No kids, so would need to work over 30 to get tax credits. When going self employed i will be working over 50, so then i qualify. I have never received any kind of benefit before, so was a bit confused about tax implications.
Also, i am only 25 so would have been too young to claim tax credits in the past.

Oh, right, my mistake - I had 16 hours stuck in my head but now you say I think that is for something else (probably childcare tax credit which wouldn't apply for you, obviously).

John_Pierpoint

If one is self employed, how can the system "know" that the claimant is "working"
xx hours per week.
I'm self employed and obviously I start working the minute the alarm clock goes off each day; I have no intention of retiring unless forced to do so by ill health.
However I would not qualify for tax credits as Mrs P is still an employee, but counting down to the big 60.
When redundancy put me out to grass, I soon decided that the job centre was a waste of time and left it to the "unemployables". It was obvious that some people knew how to work the system, there was even a school of claimants with purple lager cans who used the gardens outside.
So I got a job as a "private hire driver": pretty pathetic money but a modern car for interviews and a group of similar people with whom to chew the fat.
Had I been single and poor, I could have claimed working tax credit.
So can we say that WTC has an element of incentive to go "self employed" and absolve the UK government from embarrassing unemployment and minimum wage statistics?

qw3rt7

I am sure you are right in that instance, the government is always keen to 'minimize' unemployment records, though they might have a tough time in the present climate! I have heard that they will look at your tax return, and if you havent recorded a reasonable turnover in a certain timeframe, say a year or two (vague i now, just what i have heard) then they will consider your job a hobby and stop tax credits.
No idea how accurate this is but it does make sense, what with WTC being somewhat more than JSA.

tyllwyd

I was always a bit paranoid about proving how many hours I worked for tax credits - but at the same time, HMRC are very happy to take their tax on the profit you make, so surely you should equally be entitled to receive tax credits. It shows how rubbish the tax credits system is when it comes to self-employment.

There can't be any harm in keeping a diary logging times when you work, and at least that's something to back up your claim if they decide to query it.