Help with self employment and benefits

Swanseajack

Hi there, I'm new around here so hope I'm doing this OK...

Would appreciate some advice please.

I am 60 and was made redundant from a large pharmarceutical company last year. I am married, my wife is 50+ and we have one child under 16 living at home. Wife also unemployed, recently graduated and trying to find a job, no success so far.

We are on income based JSA, housing benefit, council tax benefit and child tax credits.

So, in an effort to restore some sanity we need to work. I have applied for 200+ jobs, but had no interviews, scarcely even any acknowledgements, very depressing. Agencies that I visit (the more honest ones) have intimated that my age is obviously a barrier. The Job Centre suggest that self employment may be my only option, which I am inclined to agree with. They have said that there are various financial incentives to go self employed, although I believe some of these are due to expire at the end of March this year and they couldn't find the leaflets anyway, hmm, not helpful.

So, I rang the tax credits helpline and the housing benefit office to try and find out some answers. I really just wanted to know how and to whom I would predict self employed earnings, for instance, and really how the whole benefits thing works if you're self employed. Both calls were futile, I put forward a very simple scenario but they would not be drawn on offering any general advice, simply tried to access my personal details which made me nervous. I'm no doubt being a bit paranoid...

My question, basically, is: "If I turned over, for instance, between £5000 and £10,000 in my first year's trading, how would that affect my current benefits. Does child tax credit become working tax credit, would I still get my housing benefit, what about council tax? How and to whom do I show my earnings?

So, in a nutshell, I want to become self employed (garden ornament type business in mind) but I would like to know how it works, will I still get benefits whilst developing the business and how can I find out what I would be entitled to. I can't cope with further stress of thinking that I won't be able to pay the rent and bills if all benefits immediately dry up because I have elected to work.

I do hope that all makes sense, my wife and I would be most grateful for any help, thank you. Jack

Hammyman

Basically you do a business plan. From this you would have an estimated startup cost figure and an income figure and what it cost you in goods etc to get that income. You add the startup cost and cost of goods etc together and take them from the gross income and thats your estimated income for the year.

Based on that you can apply for working tax credit, housing benefit, council tax benefit. You would continue to get child tax credit. Working tax credits don't seem to ask for proof but the council would want to see accounts periodically for HB and CTB and the period is different from council to council.

You mention turning over £5k-£10k but thats turnover, not profit. Your benefits are based on turnover less costs.

It is quite reasonable to expect year one income to be zero or negative due to startup costs. My first year trading was -£88 on paper however I did manage to put money in the bank most weeks. Your accountant would tell you how to get the most out of tax deductible expenses - all I'll say is that paper figures and actual reality can be somewhat different but as tax avoidance is still perfectly legal use it to your advantage. My tax credit award was based on the £88 loss.

Swanseajack

Hi, that really is most useful and has given us great hope. As our situation would more than likely be similar to yours, i.e. we would
expect to probably make a loss first year, although like you say, would hope to bank cash regularly(ish) then we can think that on paper we would appear to be actually earning less than when on JSA so would hope benefits to remain pretty much as they are now, does that sound like a realistic prospect?