Tax Credits (Self Employed) Please Help

ironman1

I would live outside London but as we half bought our home It makes it hard. The thing is the only bill we can really get down is Sky, but we are already on a blinder of a deal with internet and phone calls abroad (have family out there). Our food shop only works out 25 quid a week. Sad really, not sure where to turn at the moment.

pipscot

ironman1 wrote: »

I would live outside London but as we half bought our home It makes it hard. The thing is the only bill we can really get down is Sky, but we are already on a blinder of a deal with internet and phone calls abroad (have family out there). Our food shop only works out 25 quid a week. Sad really, not sure where to turn at the moment.

As Zagfles has said, you can have your tax credits based on this year's expected income rather than last year's if it helps (but be very careful not to underestimate your income). Also don't forget to subtract £100 per week from your partner's maternity pay when providing figures for Tax Credits.

If your partner is on maternity and you are earning approx £18K (I'm assuming this figure is your "net profit" - i.e. after expenses such as use of home, business motor expenses, work boots, tools, part of your mobile bill etc but not deducting tax/NI) you would probably get more than the basic child tax credit amount. For example if you were earning £18K a year and your partner was not working at all (and not claiming maternity) then you would probably be entitled to about £3K per year.

Also you can try finding out about housing benefit and council tax benefit. Contact your local council to investigate this.

Further help on reducing cost of living can be found on the old-style board.
Further help on self-assessment, net profit, allowable business expenses etc can be found on the cutting tax board.
Good luck :):):)

ironman1

Thank you thats a great post. I am going to earn around 18k this tax year (April 2011 - April 2012). That is before tax is taken off. So my take home will be more closer to 13/14000. Then I have to spend on tools, Public Liability insurance, National Insurance and worst of all travel which is 160-200pm.
When I spoke to the tax credit person on the phone with help filling form out she said just put your income before tax, they are not interested in anything else like tools or travel money. They told my girlfriend to put her earnings from last April to this April (about 13k before tax). There was no mention of Maternity money like taking £100 off that.

Basically, given the details I gave her she reckons we will be entitled to about £9 a week.

Sixer

ironman1 wrote: »

Thank you thats a great post. I am going to earn around 18k this tax year (April 2011 - April 2012). That is before tax is taken off. So my take home will be more closer to 13/14000. Then I have to spend on tools, Public Liability insurance, National Insurance and worst of all travel which is 160-200pm.
When I spoke to the tax credit person on the phone with help filling form out she said just put your income before tax, they are not interested in anything else like tools or travel money. They told my girlfriend to put her earnings from last April to this April (about 13k before tax). There was no mention of Maternity money like taking £100 off that.

Basically, given the details I gave her she reckons we will be entitled to about £9 a week.

Remember that your income will be the amount BEFORE tax and national insurance but AFTER your other expenses (tools, public liability, etc).

Tax and national insurance aren't expenses.

pipscot

ironman1 wrote: »

When I spoke to the tax credit person on the phone with help filling form out she said just put your income before tax, they are not interested in anything else like tools or travel money.

The Tax Credits people are not exactly experts when it comes to self-employment! Basically the figure they want is the same one that you get from your self-assessment tax return - the "net profit" after tools etc. If you have already done your 2010/2011 tax return then you can give them the accurate figure for last year but you will obviously have to estimate your 2011/2012 profits.

They sometimes don't even ask about this year's income - so you might have to actually say to them "my joint household income will be lower this year - can I give you some estimates!".

ironman1

Thats cheered me up. Didn't think I could take expenses off. That must amount to around £2000 a year at least.

The main confusion for me is where I was on the cards last year. Why do they even want to know about that? Because this year, well from April I have been self employed in a completly different job.

By the way how much should we be expecting if my gf is on maternity pay (runs out in august I think) and i'm earning about 16k a year (after tools/travel expenses but not taking off tax).

Probably isn't alot more than the £9 a week original quote.

They did tell my gf to tick working tax credit aswell on the form if that makes a difference?

pipscot

ironman1 wrote: »

Thats cheered me up. Didn't think I could take expenses off. That must amount to around £2000 a year at least.

The main confusion for me is where I was on the cards last year. Why do they even want to know about that? Because this year, well from April I have been self employed in a completly different job.

By the way how much should we be expecting if my gf is on maternity pay (runs out in august I think) and i'm earning about 16k a year (after tools/travel expenses but not taking off tax).

Probably isn't alot more than the £9 a week original quote.

They did tell my gf to tick working tax credit aswell on the form if that makes a difference?

They need to know last year's income details since under normal circumstances they would use that when calculating your award for this year. However, since you are going to have a lower household income, you need to supply them with both (last year's on the form, and then you will probably need to ring them with your estimate for this year).

You can do estimates of your tax credits on https://www.entitledto.co.uk where you can put in your estimate of your income for 2011/2012 (tick the box that says income in 2011/2012 lower than 2010/2011) and it should give you a rough idea of what you should receive.

Be aware that at renewal time next year (probably May/June 2012) they will finalise your 2011/2012 award using ACTUAL figures (which is why it is very important that you don't underestimate your income - this could lead to an overpayment).

ironman1

Oh right thanks alot. I'm only going to put everything by the book anyway. I'm happy to here this, just hope we now have enough money to take us past our outgoings.

ironman1

Form got sent out last night. What happens next? If the amount seems low can we argue it?

bestpud

Soon as you get the award, which may be nil, as it is based on last years income, call them and give your estimated earnings for this year.

They will then base your award on your estimated income.

BUT, as said previously, keep a very close eye on your earnings and tell them immediately if it looks as though you have underestimated.

The £10k income disregard will not apply and you will start accruing an overpayment as soon as your income tips over your estimated amount.

I would overestimate to allow for overtime and any job changes.