Can I get LHA if I'm selfemployed?

ChloeT_2

Hi guys.

Woould I be able to claim LHA if I am self employed? I'm paying myself £200 a week from my business account into my personal one - any profit from the business is currently staying in the business account to pay off the loan I took out to start up.

I looked on the Carmarthenshire website and I couldn't see anything regarding this or what the earning/savings threshold is.

Thanks!

dmg24

You can claim, but I would not expect a great deal if the £200 is after tax. Are you under 25?

pipscot

Your income as a self-employed person is the profit from the business (not the drawings of £200) so you would need to estimate the profit from your business before you apply for LHA.

dmg24

pipscot wrote: »

Your income as a self-employed person is the profit from the business (not the drawings of £200) so you would need to estimate the profit from your business before you apply for LHA.

It sounds like £200 is the profit, as anything else is paying off the business loan.

ChloeT_2

I am under 25 but only for another 6 months.

Ah right I see, I couldn't tell you what the profit is after tax, as I am only 2 months into it. I'll have to look in to it further!

Thank you!

ChloeT_2

dmg24 wrote: »

It sounds like £200 is the profit, as anything else is paying off the business loan.

There is money in the business account, but not a great deal, the figure fluctuates, but hovers around the £1000 mark. (Some of which is the loan money Ididn't use)

dmg24

As you are under 25 you will only get the shared room rate, which looks to be £51 in your area. You will not qualify if your income is £200 (or more). The rate will increase once you are 25, so it may be worth applying then.

ChloeT_2

It didn't look like I would be going until then anyway, thanks for your help!

Sixer

dmg24 wrote: »

It sounds like £200 is the profit, as anything else is paying off the business loan.

The OP must be careful not to declare drawings on an LHA application form. The figure given must be the accurate profit shown on the self assessment declaration or an estimate of it.

OP: be very careful. Drawings are not taxable income. You must declare (or estimate and then confirm the actual figure at the end of your financial year) your exact taxable profit when claiming benefits.

Note that capital repayments of loans come out of your net profit, not your gross profit. You don't get tax relief on capital repayments of loans. You can claim the interest as an allowable expense. So the capital part of these loan repayments will form part of your taxable income.

Hammyman

ChloeT wrote: »

Hi guys.

Woould I be able to claim LHA if I am self employed? I'm paying myself £200 a week from my business account into my personal one - any profit from the business is currently staying in the business account to pay off the loan I took out to start up.

I looked on the Carmarthenshire website and I couldn't see anything regarding this or what the earning/savings threshold is.

Thanks!

Yes you can claim LHA. If you are a sole trader then your income is the profit you make, regardless of how much or how little you pay yourself. If you are set up as a Ltd Company, your income is what your PAYE pay plus dividends is from that.

For example:

In a week your business takes £400 and has £100 of expenses thus making £300 profit..
You pay yourself £200 cash in your hand/bank.

Your income if you are a sole trader is £300. If you are an employee of your Ltd company, your income is whatever the gross would be to give you £200 in your hand.

Sixer

Hammyman wrote: »

Yes you can claim LHA. If you are a sole trader then your income is the profit you make, regardless of how much or how little you pay yourself. If you are set up as a Ltd Company, your income is what your PAYE pay plus dividends is from that.

For example:

In a week your business takes £400 and has £100 of expenses thus making £300 profit..
You pay yourself £200 cash in your hand/bank.

Your income if you are a sole trader is £300. If you are an employee of your Ltd company, your income is whatever the gross would be to give you £200 in your hand.

But the £100 in expenses can only include the interest on loan payments, not the capital repayments - regardless of whether you are self-employed or a limited company.