Tax Credits (Self Employed) Please Help

ironman1

Please can someone help us here! We got the tax credit form through about a week ago but find some of the questions confusing.

My GF is currently off work on Maternity Leave (from March just gone) and is on the basic statutory pay of £128 a week.

I am a self employed builder, but last year was on the cards and was only down for earning £13000 (before tax). So from April 2010 to December 2010 I earnt around £9000. I then went to a new job self employed in January 2011 and since then to April 2011 I earnt around £5500 (before tax). I will earn about £18000 from May 2011 to next April, depending on days off etc.

My questions are, what do I put in the earnings section? Do I tell them I am on more money now, although not exactly alot. Also how does the Maternity pay come into it? I believe my GF has to put her earnings from last April to this April (around £12750 before tax) but why is that? As she will only get £4992 after tax this year.

I have done an online calculation and we should get about £450 in Tax credits per year. That is around £10 a week and we just can't live on that on top of my wages.

I am now petrified as the building game, although picking up, is on the floor. I also lose a days money every time there is a Bank Holiday, Christmas (two weeks off) etc.

I know we decided to have a baby but I have worked out once my GF's maternity pay runs out in August or whenever it is, we will be living on my £1260 a month (after tax... if im lucky) plus £80 Child Benefit and £40 approx Tax Credits.

We live in London in a Shared Ownership property where we pay MONTHLY-

£830 Mortgage/Rent/Service Charge
£96 Council Tax
£25 Insurance
£60 Gas/Elec Water
£20 Phone/Tele/Broadband
£12 Line Rental
£100 Food shopping and other household items, cleaning etc
£28 Mobile bills (£14 each)
£60 odd for Milk/Nappies
£180 for my travel to work


We have got rid of the car and rarely go out or send anything else these days. They are our bills and I seriously can't see where we can get them down, I have used cashback sites, haggled, constantly kept an eye on it all- thanks to this site mainly.

As you can see that adds up to roughly £1400pm. Considering I only get £1260 + what will be roughly £120 in 'benefits' (£1380) I can't see how we will survive after the maternity money runs out.

I know there are people worse off but how can we bring up our Son on that? Remember this is not including any clothes, haircuts, any days out at all. My only hope is I get through my course quickly enough and get put on better money by September sort of time.

I am starting to think getting on the property ladder was a bad move at 22 (both now 25).

Just found this online, looks a no go...

Co-ownership schemes

"Co-ownership schemes are run by housing associations and members buy shares in order to live in the property. The payments they make include an amount towards the association’s capital and interest costs, incurred in building the accommodation. When membership of the association ceases, co-owners receive a lump sum directly or indirectly related to the value of their accommodation, although they may have to serve a minimum period of residence before they receive such a payment. While they live in the accommodation they make payments of ‘rent’ but this is not eligible for HB. Help towards co-owners’ housing costs is available through Pension Credit, Income Support or Jobseeker’s Allowance."

merlin68

You should be getting more than £10 a week in tax credits. you can also claim housing benefit for the rent part of your home. What income figure are you going on for the year?

DaisyFlower

Its part of being a parent, you have to make sacrifices and finances is where a lot of people dont even consider the implication before having children.

If you s/e income doesnt cover everything, could you not find an employed role elsewhere - perhaps local as those travelling costs are very high.

Get rid of the mobiles, sky etc as all non essentials.

Perhaps you GF may have to look into returning to work earlier. Does your monthly amount not factor into account her maternity pay? It may not be what she wants but if you need the money to support your family then needs must.

ironman1

Well at the moment I get about £8.80 an hour and work 43 hours a week on average and ANY overtime I can get. Not alot considering we live in London. I do weekends when I can get them too but thats very rare.

I didn't realize we could maybe claim back some of the rent side of our outgoings. How does that work?

I have never claimed a thing in my life and don't know how it all works to be honest. I only want what I am entitled too, I really wish I didn't need any help. When we moved out I was meant to be getting made up in the trade to be on about £2000 a month after tax but it never materialized because work dried up at the time. It has been ok but it's hard enough now with my GF on maternity pay let alone without.

zagfles

You always put last tax year's earnings on tax credits claims/renewals.

If your joint earnings this year are going to be lower you can phone them with an estimate and you'll get more, but if your estimate turns out to be too low you'll have an overpayment so err on the high side. First £100 pw of maternity pay is disregarded.

If your earnings this year are higher, there's a 10k disregard, which means you can earn 10k more and not have an overpayment.

ironman1

DaisyFlower wrote: »

Its part of being a parent, you have to make sacrifices and finances is where a lot of people dont even consider the implication before having children.

If you s/e income doesnt cover everything, could you not find an employed role elsewhere - perhaps local as those travelling costs are very high.

Get rid of the mobiles, sky etc as all non essentials.

Perhaps you GF may have to look into returning to work earlier. Does your monthly amount not factor into account her maternity pay? It may not be what she wants but if you need the money to support your family then needs must.

Mobiles not essential in this day and age and in the job I am in? Hmmm. Also I live in London ,thats how much train travel is I am afraid.

merlin68

If your self employed how are you paying your tax and national insurance? You haven't put those down.
when claiming tax credits as self employed you put your net income down i.e you can knock of travelling, clothes lunches etc.

ironman1

Sorry I forgot to put the National insurance down, that is something like £33 every three months which I pay, although I haven't received any since Jan. May pay it when I put in my tax returns.

My tax automatically comes out of my wages. Say I earn 390 one month, I will get 310 or so in my wages and the Tax deducted.

I'm interested where the poster said I only put my net profit. Does that mean if I earn on average £1260 a month after tax I just put say £900 on the form? (Taking off travel cost, clothing etc).

merlin68

I pay my NI monthly by direct debit much easier. You get a form from housing benefit, where you list all costs. they go by net profit not gross.
If your self employed why are they paying your tax? I have to pay my own. Tax credits also ask me for net profit not gross.
Don't you have to do a tax return once a year? Seems a bit odd to me.

pipscot

ironman1 wrote: »

Sorry I forgot to put the National insurance down, that is something like £33 every three months which I pay, although I haven't received any since Jan. May pay it when I put in my tax returns.

My tax automatically comes out of my wages. Say I earn 390 one month, I will get 310 or so in my wages and the Tax deducted.

I'm interested where the poster said I only put my net profit. Does that mean if I earn on average £1260 a month after tax I just put say £900 on the form? (Taking off travel cost, clothing etc).

Don't get confused between "net profit" and "net earnings"
For the self-employed, "net profit" means that you subtract all your expenses from your total gross turnover (but do not subtract tax/NI or any other non-business expense). "net profit" is the before tax figure and this is what you need to declare to Tax Credits

ironman1

Whats odd? I do a tax return yearly yes. The boss sorts our weekly tax for us as we are sub contractors. It's all above board for a big firm. Alot of builders are self employed but work for companies these days rather than on the cards