Can someone please explain about Tax credits as I cannot understand it.

DrMopp

Hi,

My husband is disabled an has difficulty finding a job. He was laid off again last year and has not been sucessful in finding a new job.

I am carer to my son who has Autism and I get carers allowance. I had to give up my full time job a few years ago as my sons needs were complex and time consuming.

Last year I realised my husband would have problems getting re-employed so I went o evening classes to get training.

They finish in June this year and I am hoping to set up my own business. There will be no or little money from it at all at least for the first couple of years and I do not expect to draw a wage from it.

I went to the 'entitled to' page to do a calculation and because we are both unemeployed we only get Child Tax Credit.

If I work 15 hours per week self employed, we still get the same.

If I work 20 hours a week we get an extra £4,000! Even though I cannot be guaranteed as receiving any income at all from my job! Also I will not be liable for NIC's due to low income.

I cannot believe that is right!

It seems that 15 hours per week you get no WFTC but 16 hours you get full WFTC based on income, which mine will be nil.

Is that correct?

Also I have to tell the Carers Allowance people I am working but what evidence do I need to submit to them?

I thought I would need to keep an accounts book for the business, is that sufficient for them?

Why is 15 hours per week penalised and 16 hours per week rewarded despite little or now income?

I am sure I must have misunderstood the whole thing.

Can someone enlighten me

Thankyou

Indie_Kid

To calim WFTC, you need to work 16 hours per week. If you don't work, you only get child tax credit.

Because of your husbands' and sons' disabilities, you may receive extra money on top of the basic amounts.

DrMopp

Thank you

But what about income? Surely earning nothing as self employed is the same as being unemployed as far as the taxman is concerned?

Or is it that it is an incentive to try to work despite receiving no remuneration?

It is all a puzzle to me, not being 'benefit wise'.

mancitychick

You would need to register as self employed, and keep a set of accounts of the business. You will have to pay class 2 and class 4 NIC's however if your earns are under a set amount you can apply for an excepmtion certificate.

http://www.businesslink.gov.uk/bdotg/action/detail?itemId=1073790859&type=RESOURCES

mum24boys

Hi i also claim Carers Allowance as my youngest son has Juvenile Arthritis and when i re-newed i had to declare it because its classed as a taxable income. Its £2804 per year roughly. You may already be classed as employed as your NI contributions are protected. The new rules state that you can earn up to £100 per week before it starts to effect your carers. Also if you get middle or higher rate DLA for your son check your claiming the disability element of child tax credit. I did not know it existed till 9 mths ago when some one told me. They make a substantial difference, I like you, have had to give up work to look after my son as he is very poorly and requires alot of time and attention especially at night so the benefit we get makes up for my lost wages. Hope this helps.

themonkeybutler

It is a little crazy, but its true. If you are genuinely working more than 16 hrs per week, and at the end of the tax year you have made no profits, and not paid yourself a wage, you can declare nil income and recieve the full amount of WTC (including the 30 hr element if youre working over 30 hours)

Deepmistrust

DrMopp, don't forget to factor in time spent working on your own business, i.e. bookkeeping etc in your 'working hours'. You might think you are working (i.e. paid working 15 hours a week), but in reality you may be working a lot more.

Your 'income' when you are self-employed, is actually a profit or a loss, not a wage. So for tax credit purposes your 'profit' or 'loss' becomes your 'income'. So, it's more than possible to have a negative 'income', even working 15 hours or more. Though if it happened in reality, I'd seriously question my career choice.

property.advert

What you lose is the benefits you get from being unemployed and some loss of LHA and Concil Tax Benefit.

You are right though that you need to be working 16 hours. However, if you work 30 hours they give you more, but depending upon your LHA, you lose a percentage for each pound you earn over the minimum. http://www.adviceguide.org.uk/index/life/benefits/benefits_and_tax_credits_for_people_in_work.htm#who_can_get_working_tax_credit

A good calculator is http://80.169.147.100/calculators/webencalc/benefitscalculator.htm which you can use to see the logic behind and the change in LHA at each income level you put in. If you play with it, it provides a good insight.

JenniO

If you worked 16 hours s/e and your husband joined you and also became self/emp helping you with your bookeeping for instance, at 14 hours a week, he'd get WTC too with you as a joint couple, you'd qualify for the 30 hours together and he'd probably get the disabled aspect of WTC too, although that needs checking in to. At 14 hours a week he could still receive JSA if that is what he is on at the moment. HTH

Killmark

DrMopp wrote: »

Hi,

If I work 15 hours per week self employed, we still get the same.

If I work 20 hours a week we get an extra £4,000! Even though I cannot be guaranteed as receiving any income at all from my job! Also I will not be liable for NIC's due to low income.

I cannot believe that is right!

It seems that 15 hours per week you get no WFTC but 16 hours you get full WFTC based on income, which mine will be nil.

Is that correct?

Also I have to tell the Carers Allowance people I am working but what evidence do I need to submit to them?

Couple of points.

To be eligible for Carer's Allowance if you are aged 16 or over and you spend at least 35 hours a week caring for someone who is ill or disabled.

On the earning side

You cannot get Carer's Allowance if you earn more than £100 a week after money has been taken off to allow for your expenses.
Expenses that are allowed are for things like:

• some National Insurance (NI) contributions
• Income Tax
• half of any money you pay towards personal or occupational pension schemes
• other expenses you have to pay because they are a necessary part of your job

After allowing for these things, you are allowed up to half the rest of the money you earn to help meet the cost of paying someone else (but not a close relative) to look after a child or children, or the person you look after, while you are at work.